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Sales of electric cars in China are expected to surpass those with internal combustion engines for the first time next year, putting the world’s biggest car market at a historic tipping point, putting it years ahead of its Western rivals.
China is set to beat international forecasts and the Chinese government’s official target, with domestic EV sales, including pure batteries and plug-in hybrids, expected to increase by about 20% year-on-year in 2025, according to the latest estimates provided to a financial newspaper. According to the Times, published by four investment banks and a research group, sales are expected to exceed 12 million units. This number is more than double the 5.9 million units sold in 2022.
At the same time, sales of cars with conventional engines are expected to fall by more than 10% to less than 11 million next year, reflecting a nearly 30% decline from 14.8 million in 2022.
Meanwhile, EV sales growth has slowed in Europe and the U.S., reflecting slow adoption of new technology in the legacy car industry, uncertainty over government subsidies, and rising protectionism against imports from China. .
Robert Liu, director of Asia-Pacific renewable energy research at Wood Mackenzie, said China’s EV milestones will depend on domestic technology development and the global supply chain for the critical resources needed for EVs and their batteries. It shows China’s success in securing the United States. The increased size of the industry has significantly reduced manufacturing costs and lowered prices for consumers.
“They want to electrify everything,” Liu said. “No other country can match China.”
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The pace of growth in China’s EV sales has slowed since the post-pandemic frenzy, but forecasts show that the Chinese government’s official goal of 50% of car sales being EVs by 2035, set in 2020, will continue to grow. This will be achieved 10 years earlier than planned. . Norway leads the world in market share for EV sales, with more than 90% of new cars being battery-powered.
Industry forecasts were provided to the FT by investment banks UBS and HSBC and research groups Morningstar and Wood Mackenzie.
These suggest that over the next decade, factories set up in China to produce tens of millions of cars with conventional engines will have little domestic market to service.
They also highlight how the rapid rise of China’s EV industry now threatens domestic manufacturing champions Germany, Japan and the United States.
While China’s EV market aims to grow by nearly 40% year-on-year in 2024, the market share of foreign brand vehicles has fallen to an all-time low of 37%, down from 64% in 2020. Data from Automobility, a Shanghai-based consultancy.
This month alone, GM wrote down more than $5 billion in the value of its business in China. Porsche’s holding company has warned of a writedown of up to 20 billion euros in Volkswagen shares. And arch rivals Nissan Motor Co. and Honda Motor Co., Ltd. said their merger would respond to a “rapidly changing business environment.”
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Chinese automakers are facing internal conflicts. Yuqian Ding, a veteran analyst at Beijing-based HSBC, said EVs are now a “strategically important” part of China’s new high-tech economy, but the industry as a whole is facing even more growth due to intense competition. of players are expected to be “locked out” from the market. Concatenation.
“While China’s domestic EV sector is clearly thriving, it also faces slowing growth from very high levels, including model oversupply, intense competition, and price wars,” he said. “The long-term direction is clear. China’s EV industry is unstoppable.”
Tu Lee, founder of consultancy Sino Auto Insights, said the industry was only at the “beginning” of unprecedented and turbulent times.
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Vincent Sun, an equity analyst who covers China’s auto sector at investment research group Morningstar, said several multinational automakers, including Germany’s Volkswagen, expect major new models to be released in China by late 2025 or 2026. He pointed out that he does not expect to release an EV model.
HSBC estimated that Chinese manufacturers planned to launch around 90 new car models (about one a day) in the fourth quarter of 2024, nearly 90% of which were EVs.
Still, Paul Gong, head of China auto research at UBS, warned that there was uncertainty about China’s broader economic policy heading into 2025, and that after a strong finish through 2024, the market remains I expected this year to be off to a slow start.
But he added: . . The expiration of the subsidy and the imposition of a 5% purchase tax on electric vehicles in 2026 will lead to a significant increase in purchases at the end of 2025, compared to 0% until the end of 2025. ”
Additional reporting from Oslo by Richard Milne
