Will new energy vehicle tyres be the future of the Chinese industry?

In 2022, China’s tyre industry has already carried out multiple rounds of the layout around new energy vehicles. Focusing on the product of passenger car tyres, seizing the new energy vehicle tyre market seems to be an essential strategy for significant tyre manufacturers to participate in future competition.

Enter market segments for development

According to Tyrepress statistics, at least 16 well-known tyre companies have launched new energy vehicle tyres in China. International tyre brands, including Continental, Michelin, Bridgestone, Goodyear, Pirelli, Dunlop, and Hankook, have participated in this round of competition. Among them, Continental launched the eContact product in July 2022. This tyre product equipped with ContiSeal self-repairing technology is suitable for many popular new energy vehicles, such as Tesla Model X/Y/3 and BYD Qin Pro/Song Pro.

Meanwhile, Chinese domestic manufacturers such as ZC Rubber, Linglong, Prinx Chengshan, and Sailun have launched their products in the new energy vehicle tyre market. In the first half of 2022, Linglong supplied nearly 1 million tyres to the automaker BYD, involving multiple new energy vehicle products. Some people in the industry believe that the brand recognition of traditional fuel vehicle tyres will be weakened in new energy vehicle tyres, and Chinese domestic tyre brands are expected to occupy more market share.

The rapid development of China’s new energy vehicle industry has attracted the attention of many tyre manufacturers. According to data from the Ministry of Public Security, as of the end of June 2022, the number of new energy vehicles in China reached 10.01 million (including 8.104 million pure electric cars). With the Chinese government’s strict control of carbon emissions, there is still a lot of market space for new energy vehicles in the future. Some tyre manufacturers have also adjusted their operating strategies to take the lead in the new energy vehicle tyre market. In August 2022, Sumitomo Rubber announced that the truck and bus tyre products would withdraw from the Chinese market. One of the reasons the manufacturer gives is to focus more on new energy vehicle tyres and actively respond to the growing Chinese new energy vehicle aftermarket.

Opportunities and challenges coexist

Compared with traditional fuel vehicles, new energy vehicles have higher requirements for tyres. Due to battery packs, new energy vehicles generally weigh more than fuel vehicles. The wear resistance of new energy vehicle tyres needs is stronger than that of fuel vehicle tyres to ensure the vehicles’ operation. Meanwhile, the mileage of new energy vehicles is generally low. For longer driving distances, tyres used in new energy vehicles need to reduce weight and achieve low rolling resistance. New energy vehicle tyres also need good noise reduction performance. Since new energy vehicles do not have an engine, the car will be quieter while driving, making it easier for drivers to notice the noise from the tyres. New energy vehicle tyres should also perform well in indicators such as grip, acceleration and steering response speed.

The new energy vehicle tyre market is indeed an opportunity for large companies with a high level of research and development. No matter which tyre company seizes the opportunity in this market segment, it will likely obtain high returns in the short term. However, small and medium-sized tyre companies that lack independent research and development capabilities may only be spectators in this competition.

In addition, new energy vehicle tyres are also facing challenges. On the one hand, it may be difficult for Chinese consumers to completely change the situation of fuel vehicles in the short term. The number of new energy vehicles in China has exceeded 10 million, but it only accounts for 3.23 per cent of the total cars in China. Many consumers have doubts about the cruising range and battery safety.

On the other hand, the price of new energy vehicle tyres will also deter some consumers. On a well-known online shopping platform, the price of a new energy vehicle tyre can easily exceed a thousand yuan. Many Chinese consumers are very price sensitive. New energy vehicle tyres have excellent performance. However, whether Chinese consumers are willing to pay for these features will be another question.