According to the China Passenger Car Association (CPCA), 50.7% of cars sold in July 2024 were NEVs. An increase from just 7% three years ago. The US saw only 18% of its total vehicle sales in the first quarter of 2024 attributed to EVs and hybrids.
NEV sales surged by 37% in July compared to the same month last year, surpassing the 28.6% increase seen in June. Pure electric vehicle sales also rose by 14.3% in July following a 9.9% rise in June.
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In July 2024, sales of new energy vehicles, which include both electric vehicles and plug-in hybrids surged to 879,000 units.
This number represents 50.8% of all car sales in China, the first time that EVs and PHEVs have surpassed the 50% threshold in the country.
The overall car sales in China declined by 2% to 1.73 million units during the same period. This decrease was partly attributed to a slowdown in sales towards the end of the month due to some automakers taking their annual summer break and the reduction in industry-wide discounts.
Wang Chuanfu, CEO of BYD Co., the world’s largest EV and hybrid manufacturer had anticipated this milestone as early as March 2024.
He said that weekly deliveries of EVs and hybrids were already approaching or exceeding 50% of total sales.
The growth in EV sales has been supported by government policies and incentives. In late July 2024, the Chinese government doubled the cash incentives for purchasing new energy vehicles to 20,000 yuan (approximately $2,800).
EVs are also exempt from sales tax up to 30,000 yuan ($4,175) for 2024 and 2025. Additionally, the government offers a scrappage scheme providing consumers with 20,000 yuan ($2,540) when they replace their old gasoline-powered cars with new energy vehicles.
Some cities are easing restrictions on car purchases to support the growth of EVs. For example, Beijing announced an expansion of its NEV license quota by 20,000, the first increase since the introduction of strict car quotas in 2011.
The overall car market in China has faced challenges including a 5% year-on-year decline in July 2024. The reduction in discounts and the end of an industry-wide price war have affected overall car sales.
While some automakers, like BMW have started to raise prices, others including BYD have continued to slash prices to maintain competitive edge.
In July 2024, passenger vehicle exports surged by about 20% to 399,000 units. The export of new energy vehicles including both EVs and PHEVs contributed to this increase.
BYD and Tesla are among the major exporters of EVs with BYD exporting 31,000 EVs and hybrids and Tesla exporting 28,000 units in July 2024. In the first seven months of the year, BYD exported 2.38 million EVs compared to Tesla’s 1.76 million.
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The bulk of China’s auto exports have gone to Russia, Mexico and Brazil. Russia has imported 478,000 Chinese-made vehicles in the first half of the year.
Mexico and Brazil follow as major importers. Chinese automakers are increasing their share of the domestic market, accounting for two-thirds of all vehicle sales in July 2024.
According to Stephen Ezell, vice president for global innovation policy at the Information Technology and Innovation Foundation (ITIF), China’s government subsidies enable manufacturers to sustain operations without relying on market-based returns.
Beijing announced in July 2024 that it would expand subsidy programs offering cash incentives of up to $2,785 (20,000 yuan) per purchase.
China’s investment in developing the world’s largest EV charging network has facilitated the integration of electric vehicles into consumers’ lifestyles.
The availability of charging stations nationwide has alleviated range anxiety, a common barrier to EV adoption in other countries.
The country’s high-speed rail network provides an alternative to long-distance driving, allowing consumers to opt for electric vehicles for daily commutes without worrying about range limitations.
Many Chinese cities have implemented policies to restrict traditional vehicle use such as limiting driving hours or license plate availability through lotteries. These measures often favor EV owners allowing unrestricted access or easier license acquisition.
The Chinese EV market is highly competitive with manufacturers offering various models at competitive prices.
Companies like Geely and others are continually innovating to capture market share, further driving NEV adoption. China’s domestic car market experienced a 3.1% decline in July 2024.
As Chinese EV manufacturers expand internationally, they face trade barriers from countries like the US, UK, and EU.
These nations are concerned about China’s heavily subsidized EVs flooding their markets leading to discussions on implementing tariffs to level the playing field.
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