Nearly every second car sold in China was an electric vehicle (EV) last year, with a record sales boom fueled by a brutal price war between automakers and millions of dollars worth of government subsidies.
In 2024, electric vehicle manufacturers sold an unprecedented 10.97 million new energy vehicles (NEVs) in China, China Auto News Reportciting early sales data from the China Passenger Car Association (CPCA).
These sales mean that China's new energy vehicle sales increased by 41.6% from 7.75 million units in 2023. ).
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In fact, electric vehicles account for nearly half (47.9%) of the country's 22.9 million passenger car sales this year.
In comparison, electric vehicles accounted for only 22.6% of total retail sales in Europe in November. AFP reportsciting data from the European Automobile Manufacturers Association.
China remains an outperforming market Global electric vehicle sales have slowed significantly due to relatively high purchase costs, changing incentives such as subsidies, irregular infrastructure such as charging stations, and ongoing inflation.
Beijing's car trade-in subsidies are key to the growing popularity of electric vehicles. More than 6.6 million vehicles sold last year benefited from government subsidies of up to $2,800 for new energy vehicle purchases and up to $2,000 for more fuel-efficient internal combustion engine vehicles.
According to official data, more than 60% of subsidized purchases go to new energy vehicles.
On Wednesday, Chinese authorities announced they would extend subsidies until 2025 as part of an expanded consumer trade-in program to revive economic growth.
Deutsche Bank analyst Wang Bin said: “We expect the car trade-in subsidy program to drive an increase of 3 million units in full-year demand in 2025.”
market shock
The electric car boom has brought good luck to local automakers such as BYD, Geely and Xiaomi, which posted record sales for much of 2024.
According to Agence France-Presse, BYD remains the largest seller in the Chinese market, selling more than 4 million vehicles at home and abroad.
China's electric car boom has also brought prosperity to U.S. EV leader Tesla, which last year saw its global sales decline for the first time But China’s car sales still hit record highs.
Unlike Tesla, however, other foreign automakers such as General Motors, Toyota and Volkswagen continue to lose ground to local Chinese rivals.
Many of these companies are also struggling to maintain efficient capacity utilization at their Chinese factories.
In recent years, the profitability of China's automobile industry has also deteriorated. Sales margins in the first 11 months of 2024 fell to 4.4% from 6.2% in 2020, according to CPCA data.
The ongoing price war between Tesla and China's leading automakers has also forced suppliers and dealers to further lower parts prices or offer deeper discounts.
The brutal price war between BYD, Tesla, Li Auto and NIO will continue for the third year Extend sales incentives until 2025.
Exports decline
Yet amid the domestic victory, China's auto exports are expected to slow significantly this year.
China may become the world’s largest automobile exporter in 2024— despite additional tariffs Data from the China Passenger Car Association (CPCA) shows that starting from the end of October, Chinese electric vehicle manufacturers will face challenges from the EU – car exports will increase by 25% to 4.8 million units.
This will be the second consecutive year that China has led Japan, whose car exports fell 4.3% in the first 11 months of 2024 to 3.82 million units.
However, CPCA Secretary-General Cui Dongshu said that export growth this year is expected to drop to 10%, and exports to Russia are expected to decline, which will increase tariff pressure on Europe.
Cui said electric vehicle exports are expected to see “zero growth.”
- Vishakha Saxena, Reuters
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