according to results for january of downfall in sales from chinese automakers, it looks like it has a tough month for the domestic car industry. it is clear that sales were pulled ahead into december as automakers attempted to burnish year-end sales figures and that the occurrence of the lunar new year, and the accompanying spring festival, knocked january sales down. what no model could have incorporated, of course, is the devastating impact of the outbreak of the coronavirus. the usual post-golden week sales snapback will not occur this year, and the chinese automakers' association, cpca, has suggested that sales might fall 50% year-on-year in february following what looks to have been (final sales figures will be released this week) a 20% decline in sales in january.
Against this backdrop, the Chinese electric car (BEV) industry appears to have extended the massive slump that first manifested itself after government subsidies on BEV purchases were halved in July 2019. China's electric car market, once piped for "explosive growth" by Bloomberg qq红包扫雷群埋雷挂and other publications, is crashing. The fallout is clear from early sales results from Chinese BEV makers. State-controlled BAIC, the number one seller of BEVs in China in 2019, posted a 54.5% year-on-year decline in BEV sales in January, representing an astounding 94.5% sequential decline. BAIC's BJEV model was the clear winner in the Chinese electric car market in 2019, with about 150,000 units sold, but clearly that momentum has dissipated.
byd, which is often called a “buffett play” although berkshire owns less than 10% of the company, posted a similarly brutal month, with bev sales falling 68.3% year-on-year in january. interestingly, byd's sales of gas-powered cars actually rose 18.3% in january. u.s.-listed nio, shares of which have hitched a ride on the tesla bandwagon in the past few weeks, also posted a disturbingly low figure for sales in january with 1,598 units sold, an 11.5% year-on-year decline. that figure included only 105 unit sales of nio’s higher-end es8 suv.
so, january was a horrible month for electric car sales in china. it is too hard to see any light at the end of the tunnel as ncov-2019 is still raging across the middle kingdom and taking an almost incomprehensible human toll. that's only a possibility for nio as baic, byd and other local manufacturer sell at a much lower price point than tesla. even after subsidies, the china-made model 3 retails for rmb 300,000 (about usd 42,000) while cars such as the top-selling bjev sport a post-subsidy price of less than half of that.
so, elon musk picked the worst time to hype tesla's share price based on the opening of a chinese plant that at its initiation was producing "locally-made" vehicles with only 30% local content. sales will determine the future of tesla's share price in 2020, not production. it is an enigma why musk was “extremely comfortable” with a sales estimate of 500,000 units for 2020 after tesla needed an extraordinary sales month in the netherlands in december just to achieve the low end of management’s guidance for 360,000 - 400,000 units in 2019.
the current situation of china's electric vehicle market gives a clear idea that it is too hard for tesla sell half a million cars in 2020.