China electric-car makers BYD, Xpeng, Li Auto, Nio stand to benefit as lower loan rates recharge sales after Covid-19 woes

Credit granted for car purchases in June rose 37.5 per cent to US$8.1 billion compared with a month earlier, according to Hua Chuang Securities

Interest rates have fallen by half after commercial lenders were told to cut rates to support the industry, according to state-owned bank officials

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A Nio showroom in Shanghai, pictured on June 8, 2022. Photo: Bloomberg

Published: 10:30am, 18 Jul 2022

China’s electric-car market has received a fast recharge over recent weeks as banks dropped lending rates for vehicle loans to boost sales of new-energy vehicles (NEVs).

More young drivers are taking out loans to buy long-coveted cars, making the sector a new bright spot in China’s economy. While overall gross domestic product growth has stalled and the housing market is in distress, the electric-car market looks set for healthy acceleration despite the havoc a two-month lockdown in Shanghai brought to China’s “Motown”.

The Ministry of Commerce, along with 16 other industry regulators, announced last week that it would roll out more incentives, including easy credit extended to car buyers, to bolster the NEV sector, which comprises pure electric, plug-in hybrid and hydrogen fuel-cell cars.

Two officials with state-owned banks said commercial lenders had been told to reduce vehicle loan rates to echo Beijing’s call to support the NEV industry. The move stands to benefit BYD, which just overtook Tesla in terms of units sold, Xpeng, Li Auto, Nio, and even Evergrande, which just launched its first electric car.

A road during morning rush hour in Beijing on July 2, 2019. Not until 2014 did Chinese car shoppers start to use loans in significant numbers. Photo: Reuters

Lenders granted as much as 55 billion yuan (US$8.1 billion) in credit for car purchases in June, an increase of 37.5 per cent from a month earlier, according to an estimate by Hua Chuang Securities.