China has achieved significant success in the new energy vehicle sector, with its market share surpassing that of traditional internal combustion engine (ICE) vehicles for the first time. This is happening in the context of the country’s ambitions for a greener and smarter future. According to the China Association of Automobile Dealers, retail sales of electric cars in July reached 878,000 units, accounting for 51.1% of the country’s total car market. This is a historic moment for both the Chinese automobile industry and the global transition to green sustainable transportation, Radio China reported.
Zheng Yun, senior partner and head of automotive business for Asia at consultancy Roland Berger, points out that this is a “qualitative change” in the new energy car market. In addition, the pace of transformation has accelerated significantly in the last few years, with only 1% of the market share of these cars in 2015 alone. Analysts emphasize that exceeding the market share of 50% is a historic moment that marks the beginning of a new era in the automotive sector. Thanks to a number of favorable government policies and corporate innovation, the transition to greener technologies in China’s auto industry is not only accelerating local economic development.
The growth of this sector is the result of several key factors. The Chinese government is playing a major role in promoting the green transition through a number of policies and incentives. This includes financial subsidies, tax breaks and infrastructure investments. At the same time, Chinese car companies such as BYD are successfully integrating electric and digital technologies into their models, further boosting demand. Tech giants like Xiaomi are also entering the sector, trying to gain market share in the fast-growing industry. Advances in core technologies from batteries to intelligent systems and the formation of an efficient and reliable industrial chain have further enhanced the competitiveness of China’s new energy vehicles.
Bill Russo, founder and CEO of Automobility Limited, notes that while subsidies and incentives were initially a major driver of the market, consumers are now choosing electric cars for their improved features and capabilities such as lower maintenance costs, longer mileage and improved power. New EV models in China offer a significantly better user experience. They are aimed at tech-savvy users, featuring advanced technology features.
An important role for the growth of the sector is also played by the rapid expansion of the infrastructure for charging electric cars. By the end of June 2023, the number of charging stations in China reached 10.24 million, representing an increase of 54% over the same period of the previous year. This development has greatly reduced drivers’ concerns about mileage and charging convenience.
“Demand, not policy, has actually become the main factor driving sales of new energy vehicles,” stressed Liu Jia, an analyst at Nomura Orient International Securities. Sales of electric cars in July rose 36.9% year-on-year, while sales of conventionally fueled cars fell 26%. As the world’s largest auto market, China has the ability to change the global industry, Liu added. Chinese new energy vehicles are already well received in various countries and contribute to the local transition to green energy. Chinese manufacturers are also expanding their global presence by building assembly lines and battery factories overseas.
Despite promising prospects, China’s EV sector faces challenges related to trade protectionism. The United States and the European Union have imposed additional tariffs on Chinese electric vehicles this year. In response, China challenged the measures at the World Trade Organization in August. According to Chinese Vice Minister of Finance Liao Ming, protectionist measures will not solve the real problems, but will hinder the global fight against climate change. Experts believe that such restrictions will slow the development of the electric car industry and hinder efforts to reduce carbon emissions.
“The trend of the times calls for a rapid shift to electrification and intelligence in the automotive industry,” said Cui Dongshu, general secretary of the China Automobile Association. “As Internet and AI technologies are integrated into vehicles, they will unlock new possibilities.”
China’s automotive sector is already accelerating the intelligent transformation of its products. Partnerships between companies such as BYD and Uber to deploy electric vehicles in key global markets, as well as Baidu’s robot taxi tests in cities such as Beijing, Wuhan and Shenzhen, are evidence of this trend. According to Han Zhao, director of the technology department of the China Association of Automobile Manufacturers, while the first phase of the auto technology revolution focused on electrification, the second phase will focus on smart technology.
The State Development and Reform Commission predicts that by 2025, the number of smart vehicles in China will reach 28 million, with a penetration rate of 82%. By 2030, this number is expected to grow to 38 million and the penetration rate of smart technology in cars will reach 95%. This means that the integration of EVs with smart systems such as autonomous driving and smart charging will create a safer and more efficient transport ecosystem.