BYD
Electric vehicle sales in China are set to eclipse the sale of traditional vehicles for the first time next year, putting the country ahead of the West in a critical part of the clean energy transition, according to a new report.
Domestic EV sales in China are projected to grow 20% year over year to more than 12 million cars in 2025, according to the latest figures shared with the Financial Times by investment banks UBS, HSBC, and other research groups.
The projections, which include sales for both pure EVs and plug-in hybrids, offer a stark contrast to the outlook for internal combustion engine vehicle sales, which are expected to fall by over 10% to less than 11 million cars in the coming year, the report said.
The figures mark a key turning point in the world's largest car market and signal how much faster the clean energy vehicle transition is taking shape in China versus the West. In Europe and the US, consumer interest in EVs has been mixed in the face of high interest rates and inflation.
EV sales in China have benefited from a mix of government subsidies and domestic competition pushing prices down.
EV sales in China this year have been boosted by a Beijing-led program that offers a subsidy of over $2,800 to any consumer who trades in their internal combustion engine vehicle for an EV or hybrid.
Competitive domestic manufacturers such as the Warren Buffett-backed giant BYD have engaged in aggressive price-cutting strategies to incentivize consumer purchases.
In March, BYD added a 5% discount to its smallest EV the Seagull, making it less than $10,000. Similar moves have been made by others across China's EV industry, such as Nio, as carmakers battle to win over consumers on price.
Elon Musk's Tesla also cut vehicle prices in several countries, including China, earlier this year to combat aggressive pricing strategies from domestic EV firms.
Though Tesla's revenue declined 3.1% year-on-year to $46.8 billion in the first six months of 2024, its China arm announced a total sale of 21,900 EVs in China in the first week of this month, its highest weekly sales in the fourth quarter, per figures first reported by Reuters.
Chinese EV makers have sought to replicate their domestic growth stories overseas, but are hitting a wall against tough Western tariffs.
In October, the EU decidedto proceed with raising tariffs on Chinese EVs up to 45% over a five-year period following concerns that carmakers in the country were receiving excessive support from Beijing.
The US government raised tariffs on Chinese EVs to 100% back in May. It's still unclear whether these headwinds will impact what looks like a bumper year for Chinese EVs.
