Chinese New Energy Vehicle sales forecasted to reach 8 million units in the year 2023, with predicted growth deceleration.
In a recent report titled "One in Four Cars Sold in China in 2022 Was an EV", ING projects that the electric vehicle (EV) market will continue to grow, albeit at a slower pace than in previous years. This growth is anticipated to be led by China, which is expected to dominate the global EV market by 2030, with more new zero-emission vehicles sold than vehicles with internal combustion engines.
The Chinese EV market's upward trend is driven by government programs that have been instrumental in developing the country's charging infrastructure. However, as subsidies phase out, a price war is looming in China's EV market. Brands like BYD, MG, and Great Wall are aiming to achieve cost and market leadership rapidly, leading to significant cost advantages they plan to exploit in Europe.
Despite current EU import tariffs of around 108%, these Chinese electric cars are expected to enter European markets at much cheaper prices, forcing European automakers to respond quickly to avoid being outcompeted. The Chinese EV market is anticipated to maintain its competitive edge, with increased competition from both seasoned players and EV start-ups.
China's EV market is currently dominated by local brands, with BYD leading the pack with a market share of almost 30%. In 2022, the percentage of Battery Electric Vehicles (BEVs) in China's overall EV sales fell, while the percentage of Plug-in Hybrid Electric Vehicles (PHEVs) rose to 24%.
The switch from traditional cars to EVs in China began more than a decade ago and has gathered pace in recent years due to government subsidies. However, without these subsidies, EV sales in China are predicted to decline, according to the ING report.
As of 2022, China had more than 1.5 million public charging stations, making it the nation with the most charging infrastructure. The Wuling Hongguang MINI EV was the best-selling EV model for eight quarters until Q4 2022, when it was overtaken by the BYD Song.
The report also suggests that government subsidies were the primary factor in China's 2022 EV market growth. However, the withdrawal of EV subsidies is expected to slow sales growth. In response to rising raw material costs and the elimination of EV purchase subsidies, BYD increased the price of its electric vehicles by $250 to $900 in January 2023.
Later, in February, BYD announced price reductions, following Tesla. The prices of new BYD models were cut by $860 to $1,150. Despite the price increases and subsequent reductions, the cost of owning an EV in China is forecasted to be comparable to that of a conventional vehicle by 2026.
The Chinese EV market remains the most vibrant in the world, with over 94 brands offering more than 300 models. The price battle in the Chinese EV market, driven by intense domestic competition, is expected to reshape the global automotive landscape in the coming years.
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