China’s EV sales set to overtake traditional cars years ahead of west

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Electric vehicles are expected to sell cars with internal combustion engines for the first time in China next year, a historic inflection point that puts the world’s largest car market ahead of Western rivals.

China According to the latest estimates provided to the Financial Times, international forecasts and Beijing’s official targets – including pure batteries and plug-in hybrids – are set to break with domestic EV sales to more than 12 million vehicles in 2025, growing at around 20 percent year-on-year. By four investment banks and research groups. That number will more than double to 5.9 million sold in 2022.

At the same time, sales of conventionally driven vehicles are expected to fall by more than 10 percent next year to less than 11 million, reflecting a nearly 30 percent decline from 14.8 million in 2022.

Meanwhile, EV Sales growth has slowed in Europe and the US, reflecting the legacy car industry’s slow adoption of new technology, uncertainty over government subsidies and growing protectionism against imports from China.

Robert Liu, director of Asia-Pacific renewables research at Wood Mackenzie, said China’s EV milestone indicates success in developing domestic technology and securing global supply chains for critical resources needed for EVs and their batteries. Scale of industry means steep production cost reductions and lower prices for consumers.

“They want to electrify everything,” Liu said. “No other country comes close to China.”

While Chinese EV sales growth has slowed since the post-pandemic frenzy, forecasts say Beijing’s official goal, set in 2020, for EVs to account for 50 percent of car sales by 2035, will be achieved 10 years ahead of schedule. .

The FTK industry was forecast by investment banks UBS and HSBC, as well as research groups Morningstar and Wood Mackenzie.

They indicate that in the next decade, factories set up in China will have almost no domestic market to serve the hundreds of millions of cars with traditional engines.

They also highlight how the rapid rise of the Chinese EV industry is now threatening the national manufacturing champions of Germany, Japan and the United States.

As China’s EV market tracks to grow close to 40 percent in 2024, the market share of foreign-brand vehicles has fallen to a record low of 37 percent — a sharp decline from 64 percent in 2020, according to data from Automobility, a Shanghai-based consultancy.

This month alone, GM wrote down more than $5 billion of its business value in China; The holding company behind Porsche warned of a writedown in its Volkswagen stake of up to 20 billion euros; And arch-rivals Nissan and Honda said they were responding to a “massive change in the business environment”. With the merger.

Chinese automakers face their own internal competition. Yuqian Ding, a veteran Beijing-based analyst at HSBC, said that while EVs were now a “strategically important” part of China’s new, high-tech economy, fierce competition was expected to “crush” more players from the market as the industry consolidated.

“While China’s domestic EV sector is clearly improving, it is also facing sluggish growth – from a very high base – an oversupply of models, intense competition and a price war,” he said. “The long-term direction of travel is clear – China’s EV juggernaut is unstoppable.”

Tu Le, founder of consultancy Sino Auto Insights, said the industry was “at the beginning” of a period of unparalleled growth.

Vincent Sun, an equity analyst covering China’s auto sector for investment research group Morningstar, noted that several multinational carmakers, including Germany’s Volkswagen, do not expect to release major new EV models in China until late 2025 or 2026.

HSBC estimated that about 90 new car models were planned to be released by manufacturers in China in the fourth quarter of 2024 – about one a day – and about 90 percent were EVs.

Still, Paul Gong, head of China automotive research at UBS, cautioned that there is some uncertainty over China’s broader economic policy in 2025 and predicted a “weak start to the year” for the market after a strong finish in 2024.

But he added: “We hope . . . A strong uptick in purchases by the end of 2025, driven by the end of subsidies and the imposition of a 5 percent purchase tax on electric vehicles in 2026 – compared to 0 percent by the end of 2025.”