Vmoto is in prime position as China pushes to become a global leader in electric vehicle production
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Special Report: Vmoto is well placed to benefit from broader industry support in China, as policy makers prioritise growth in electric vehicle (EV) production.
Electric scooter company Vmoto (ASX:VMT) is sizing up global sales opportunities from its production base in China, as it looks to continue its H2 2019 sales momentum to kick off a new year.
Shares in the company have held their gains since the stock surged in early November, after a positive Q3 trading update that showed healthy sales growth around the world and a strong pipeline of customers in the fast-growing European market.
Like Europe, China’s electric vehicle industry also benefits from a supportive policy environment, with governments proactive in adapting policy framework to drive adoption.
In China, that includes demand-side initiatives, such as subsidies for consumers on electric vehicle purchases. And earlier this week, the Chinese government announced there’ll be no changes to EV subsidies heading into the northern summer.
Speaking with Stockhead from Shanghai, Vmoto director Ivan Teo said government support for the sector also extended to the supply side – part of a broader strategic vision to establish China as a global hub for high-end electric vehicle production.
He cited the recent opening of Tesla’s EV factory just outside of Shanghai as a good example of how those policies are contributing to growth.
“They built and finished the Tesla facility in one year, which is extremely quick. To build a super factory that fast, you can only do that in China because it already has very sophisticated supply chains around electric vehicle production,” Teo said.
He added that positive flow-on effects were starting to become noticeable on the ground as momentum in the sector built.
“If you visit Shanghai, EV’s are everywhere at the moment,” Teo said. “The key point for China is that the supply chain is going to be better quality and stronger, and that presents a real opportunity for Vmoto.”
And Teo said the company had a strong foundation to take advantage of the developments in EV production as it positioned itself as a high-end manufacturer of two-wheeled EVs (scooters and motor bikes).
“The market for two-wheeled electric vehicles is growing at around 50 per cent per year globally, and demand from Europe in particular is strong,” he said.
He’s also optimistic that the introduction of Tesla’s new production facility will help create a positive feedback loop for the sector in China.
“You need economies of scale to achieve lower costs. In this way, we can source better-quality parts at lower per-unit costs, and I think that presents a unique opportunity for Vmoto,” Teo said.
Ultimately, the Chinese government is “very keen to become the leader in EV production in the world”, Teo said.
“Vmoto has the manufacturing license, and strong foundation in this industry since our launch in 2009.
“So I think the company can really benefit from the broader growth in the sector which is creating a more sophisticated supply chain.”