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Electric vehicle sales are expected to overtake internal combustion engine vehicles in China for the first time next year, a historic inflection point that puts the world's largest auto market years ahead of Western rivals.
China It is set to smash international expectations and Beijing's official targets by growing domestic electric vehicle sales – including pure battery and hybrid vehicles – by about 20 percent year-on-year to more than 12 million vehicles in 2025, according to the latest estimates provided to the Financial Times. By four investment banks and research groups. The number will be more than double the 5.9 million cars sold in 2022.
Meanwhile, sales of conventionally powered vehicles are expected to fall more than 10 percent next year to less than 11 million, reflecting a decline of nearly 30 percent from 14.8 million in 2022.
Meanwhile, Eve Sales growth has slowed in Europe and the United States, reflecting the legacy auto industry's slow embrace of new technology, uncertainty about government support, and rising protectionism against imports from China.
Robert Liu, director of renewable energy research in Asia Pacific at Wood Mackenzie, said that China's significant achievement in the field of electric vehicles indicates its success in developing domestic technology and securing global supply chains for the vital resources needed for electric vehicles and their batteries. The scale of the industry meant sharp reductions in manufacturing costs and lower prices for consumers.
“They want to electrify everything,” Liu said. “No other country comes close to China.”
While China's electric vehicle sales growth has slowed after the post-pandemic frenzy, forecasts suggest that Beijing's official target, set in 2020, for electric vehicles to account for 50 percent of car sales by 2035, will be achieved 10 years before. Scheduled date. .
Industry forecasts were provided to the FT by investment banks UBS and HSBC, as well as research groups Morningstar and Wood Mackenzie.
It implies that the factories that will be built in China to produce tens of millions of cars with conventional engines will have almost no domestic market to serve over the next decade.
It also highlights how the rapid rise of China's electric vehicle industry now threatens national manufacturing champions in Germany, Japan and the United States.
With China's electric vehicle market heading toward annual growth of nearly 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 a new report. Data from Automobility, a Shanghai-based consulting firm.
This month alone, GM reduced more than $5 billion in the value of its business in China. The holding company behind Porsche has warned of writing off its stake in Volkswagen by up to 20 billion euros; Arch-rivals Nissan and Honda said they were responding to a “fundamentally changed business environment.” With the merger.
Chinese automakers face internal competition. Yuqian Ding, a veteran Beijing-based analyst at HSBC, said that while electric vehicles are now a “strategically important” part of China's new high-tech economy, intense competition is expected to “knock out” more players from the market as Industry. Uniform.
“While China's domestic EV sector is clearly booming, it is also facing slowing growth – from a very high base – oversupply, intense competition and a price war,” she said. “The long-term trend is clear – China's electric vehicle juggernaut is unstoppable.”
Tu Lu, founder of consultancy Sino Auto Insights, said the industry was only at the “beginning” of a period of unparalleled disruption.
Vincent Sun, an equity analyst who covers the Chinese auto sector for investment research group Morningstar, noted that many multinational automakers, including Germany's Volkswagen, do not expect to launch major new models of electric vehicles in China until late 2025. Or 2026.
HSBC estimates that about 90 new car models are planned for release by manufacturers in China in the fourth quarter of 2024 – about one model per day – and about 90 percent of them are electric cars.
However, Paul Gong, head of China auto research at UBS, warned there was some uncertainty about China's broader economic policy heading into 2025 and predicted the market would have a “weak start to the year” after a strong end to 2024.
But he added: “We expect.” . . Strong rise in purchases at the end of 2025, driven by the end of subsidies and the introduction of a 5 percent purchase tax on electric cars in 2026 – compared to 0 percent until the end of 2025.
