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Experts Predict China’s NEV Market to Sustain Rapid Growth Amid Rising Demand and New Models

BusinessAutomotiveExperts Predict China's NEV Market to Sustain Rapid Growth Amid Rising Demand and New Models

China’s new energy vehicle (NEV) market is poised for continued growth, despite a lackluster start to the year. Experts and industry executives predict that demand will rise, and a range of new models will help propel sales. In January, sales of electric vehicles and plug-in hybrids fell 6.3 percent year-on-year to 408,000 units, ending a 30-month growth streak. The decline was due in part to NEV buyers rushing to place orders in late 2022 to be eligible for financial incentives, as well as the earlier-than-usual Spring Festival, which took place in January this year.

Chen Shihua, deputy secretary-general of the China Association of Automobile Manufacturers (CAAM), stated that the fall in January was expected and that a comparison to previous years should wait until the first quarter’s performance is evaluated. CAAM’s estimate for NEV sales in China this year is 9 million units, up from 6.89 million in 2022.

Many automakers saw year-on-year sales declines in January. Nio, a leading electric car startup, sold 8,506 cars, down 11.87 percent year-on-year and 46.22 percent from December. Nio CEO Li Bin stated that the first quarter, if not the first half, will be tough, as some car buyers placed orders late last year for subsidies that could reach over 12,600 yuan ($1,818). But Li said he is confident of Nio’s performance for the year, adding that it should outsell Toyota’s premium Lexus models in China, which will require Nio to double its sales from 2022.

Another NEV startup, Li Auto, is even more ambitious. CEO Li Xiang said the company has set a goal to capture a 20 percent share of China’s 300,000-500,000 yuan SUV segment, including both gasoline-powered and electric vehicles. Li said the segment, which includes rivals like the Audi Q5 and BMW X3, has a volume of 1.4 million to 1.5 million units. That means Li Auto is aiming to sell 280,000 to 300,000 units in China this year, up from 130,000 in 2022.

While some brands saw a decline in sales in January, leading brands like BYD and Tesla did not see any decrease at all. BYD sold 151,000 units in the month, up 62.4 percent from a year earlier. Tesla’s Shanghai plant delivered 66,000 units in January, registering a 10.3 percent growth year-on-year, according to statistics from the China Passenger Car Association. Analysts at Cinda Securities wrote in a research note that January would be the lowest point for the year and vehicle sales will rise again starting from February to April.

As the demand for NEVs grows, there will be more choices available in the market. Deloitte said there were 280 electric models available in the Chinese market last year. Zhang Yongwei, vice-president of China EV 100, a major think tank in the industry, said at least 100 EV models would hit the market in 2023, based on an in-house domestic survey. Charging infrastructure will also play a significant role in encouraging potential NEV buyers, with China currently boasting 5.2 million charging pillars, the most in the world, according to the National Energy Administration.

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