Emerging development of NEV industry

陸一軒

1. Introduction

This essay talks about the new energy vehicle industry in the dominant market environment. It deals with four questions. Firstly， it depicts the new energy vehicle industrys dominant economic characteristics. Secondly， it answers the question of what are the driving forces of industrys change， and how these driving forces will affect the industry profitability. Thirdly， it handles with the key factors for competitive success. This passage will give you a general idea about the industrys dominant marketing environment and the situation of its development.

2. What are the industrys dominant economic characteristics？

2.1 market size and growth rate

When it comes to the market size and growth rate of new energy vehicles industry， we must talk something about the development of new energy vehicles production in China in recent years. New energy vehicles roughly including three categories： blade electric vehicles， hybrid electric vehicles and fuel cell electric vehicles. （Liu Ruiqi， 2014） At present， Chinese new energy vehicles industry begins to take shape. In 2002， the number of our new energy vehicles production was 12552， including 11241 blade electric vehicles and 1311 hybrid electric vehicles. However， the sales is still relatively small. Among the companies of national new energy vehicles， only Chery， JAC and BYDs sales reached 1 thousand in 2012. （Tang， 2015） This is because our government didnt realize the importance of developing the industry before， and the fact of companies under-investment in the NEV industry. The government has learnt that if we cant protect out environment well， it will be impossible to achieve a sustainable economic success. Therefore， the industry is in a rapid growth and takeoff now thanks to the support of our governments policy.

2.2 demand-supply conditions

The development of NEV can contribute to protecting the environment and promoting economic prosperity. That explains the reason that why government introduce policies to support NEV industry. In 2001， China launched into ‘863 program to research and develop NEV technology. China expects to manufacture 2 million blade electric vehicles and hybrid electric vehicles. China established Beijing New Energy Vehicles Industry Alliance in 2009. The appearance of this alliance can help to combine NEV production， NEV research and technology innovation well. The supply of NEV has no need to worry about.

The demand of NEV can be a problem. Many customers concern about the availability of an adequate charging infrastructure. Only 70000 NEVs are in use in China and most of them are buses or taxis. （Guan Hailing， 2012） Its inconvenient that when you drive a long way or when you are driving on a expressway you find there is no charging infrastructure.

2.3 number of rivals

The industry concentrated and dominated by a few large companies in China. There are many new energy electric vehicles companies， however， only a few large companies have relatively satisfying sales. The most competitive NEV companies are Chery， JAC， BYD， First Auto Work， Shanghai Automotive Industry Corporation and Dongfeng company. Since 2009， China has become the largest new vehicle market in the world. （Gong & Wang & Wang， 2012） People and our government put more emphasis on protecting the environment. Traditional cars discharge exhaust gas and do harm to the nature. As a result， more companies shift their focus on the production of new energy vehicles. The leading companies like Chery and BYD enter into the market early， and they have best opportunities. They invest a lot of money in the research of NEV， so their cars possess better performance. For example， First Auto Works hybrid electric vehicles can save 42%fuel expenditure and it reaches international advanced level. Other companies dont have such technoloty and they may find it more difficult to survive in the market.

3. What are the driving forces of industry change， and what impact will these have on industry profitability？

3.1 growth rate of demand

Firstly， the growth rate of demand is a driving force of industry change. （Gamble， J.E & Thompson， 2011） NEV increasingly concentrate in the large cities and city clusters in the eastern part of China and capitals of the middle provinces. Because people living there have higher income level and economy develops well. The huge demand attract more and more companies enter the market. New energy vehicles industry develops quite faster in these areas.

3.2 air pollution

Secondly， people living in the large cities are suffering from air pollution. The PM10 data from these cities collected by WHO in 2009 indicates that there is no city met the WHO guideline of an annual mean limit of 20μg/m?. （Sun Dongsheng， 2012） Hence， the environment can also be a driving forces of industry change. In countryside or small cities， the NEV industry can not develop so fast because the air environment has been good enough for people to live， and traditional vehicles can already meet the customers need. Because of the education of Chinese government and information obtained from the Internet， people are more and more concerned about the environment. That makes NEV companies to concentrate on research how to make their products more energy-saving.

3.3 government policies

Finally， the promotion of government policies help a lot. In 2009， China introduced ‘The thousands of vehicles， tens of cities program. This program focuses on the usage of NEV in public service vehicles， including buses， government vehicles， taxis and vehicles for special purposes. （Gong & Wang & Wang， 2012） This program is introduced in 25 provinces， which have huge amount of population and their relatively high income. There is certainly to be a much higher possibility for these people to own private cars. These 25 cities together occupied 18% and 33% of the national total human population and vehicle stock. The air pollution can reduce much because of the program and which will benefit a great number of people. The TVTC program has proved to be a success. By the end of 2012， in these 25 cities there are 52，623 NEV in the public service vehicle fleet. （Li Haoming， 2014）

4. Does the industry offer good prospects for attractive profits？

NEV industry is experiencing a fast development. The problem of environment draws more and more attention cause its the basis for us to have a better life. Manufacturers and government also realize that without pleasant environment， economy also cant develops well. Government has introduced lots of policies to support NEV industry， which helps NEV manufacturers have excellent opportunities. Companies can benefit from the low taxes and subsidy policies， which can lead to a lower manufacturing cost. Thats the reason for NEV industry to become more competitive. Drivers can enjoy the convenient and cheap travel with NEV. Therefore， the profit of NEV industry appears to be more attractive. The popularity of NEV is not a dream any more， people can have a harmonious relationship with nature with the usage of NEV.

5. Conclusion

Nowadays， the problem of air pollution and disruption is becoming more and more serious. However， this provides a good opportunity for the development of NEV industry. Government introduces many policies like TVTC program， ‘863 program to promote the development of NEV industry. The innovation of NEV technology also achieve a remarkable progress， which makes the cost to be lower and performance of products to be better. More and more drivers begin to consider about the choice of NEV instead of traditional cars. This phenomenon can both protect our environment and NEV manufacturers can get attractive profits. However， there are not enough charging station， and which may make drivers feel inconvenient. Our government is trying to improve the conditions， so it may not be an issue in the future. NEV companies are making use of the Internet to advertise their brand and make people learn more about the environmental destruction. Some of our dominant NEV manufacturers such as BYD have many product patents， even their own business model. NEV industry has become a more mature industry in China and its future will even be better. Driving NEV will be a fashion and which can show your responsibility for our environment. Driving NEV instead of traditional cars is a trend in the whole world without question.

References：

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[2]Tang Baojun（2015），New energy vehicles：roadmap and policy research，1st ed，Science press，Beijing.

[3]Liu Ruiqi（2014），Chinese NEV industry alliance，1st ed，Beijing jiaotong university press，Beijing.

[4]Guan Hailing（2012），Low-Carbon Eco-citys development，1st ed，Economic science press，Beijing.

[5]Zhong Zhihua & Wan xinmin（2015），Energy-saving and NEV industry development report，Science press，Beijing.

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[7]Sun Dongsheng（2012），Chinese automobile industry development research，Wuhan university of technology press.

[8]Li Haoming（2014），The report of Chinese NEV industry in 2012，Southeast university press.