VW, GM face risk of idle factory capacity without faster EV transition, Greenpeace warns

SHANGHAI — Automakers including Volkswagen Group and General Motors could have considerable unused production capacity for conventionally powered vehicles in China by 2030 if they do not speed up the transition to electric vehicles, Greenpeace said on Thursday.

As demand for new energy vehicles including electric and plug-in hybrids grows, new NEV-only producers such as BYD will take market share and leave legacy automakers sitting on wasted production space geared toward unwanted internal combustion engine cars, the organization said.

Over-capacity in China's combustion engine light-vehicle market is a long-standing issue, with a ban in place by regulators since 2017 on the construction of new assembly plants.

By the end of 2021, China had total annual production capacity for 40.89 million passenger vehicles of all fuel types with a utilization rate of 52.5 percent, according to research and data from the China Passenger Car Association.

Greenpeace estimated that if NEVs make up 40 percent of sales by 2030 - a conservative forecast considering 30 percent of sales this year so far were of NEVs - a third of ICE production capacity at 10 major automakers including Volkswagen Group, Toyota Motor Corp. and General Motors Co. could end up unused.
 

If the sales rate reaches 70 percent, the average unused capacity utilisation rate for ICE production would rise to two thirds, Greenpeace said, basing its estimates on public information about planned capacity and projected sales.

GM and Volkswagen will face the largest pressure with over 3 million units of idled capacity for ICE vehicles in China, presenting a major risk for those automakers, Greenpeace said.

Volkswagen, GM and Toyota said in statements to Reuters they were accelerating their EV strategies in China, with GM adding it would convert over half of its manufacturing footprint in the country to be EV-capable by 2030.

Volkswagen pointed to its rising sales in China and said it expects to profit from the country's growing demand for cars.

"We will speed up in electrification and digitalisation," a spokesperson said.

Greenpeace's study did not factor in possible plans by automakers to export cars from China to offset the production glut, a strategy some have already taken.

Chinese NEV makers including BYD Co. have outpaced foreign peers with EV models and followed Tesla Inc.'s example with bold price cuts for best-selling cars this year, cannibalising sales of ICE vehicles as the price gap between the technologies narrows.