China's penetration of new energy vehicle (NEV) sales is likely to exceed 50pc in the coming three months, according to Wang Chuanfu, chairman and president of the country's largest NEV manufacturer BYD.
"[China's] NEV (sales) penetration already reached 48.2pc last week," Wang told delegates at the 2024 China EV100 forum on 18 March. "If it continues to develop at this rate, I estimate that the penetration (in weekly sales) may exceed 50pc, or even higher, in the next three months, leading to a dominating position in the auto market for NEVs."
NEVs refer to battery-electric vehicles (BEVs), plug-in hybrid electric vehicles (PHEV) and fuel-cell vehicles in China.
BYD surpassed US electric vehicle (EV) producer Tesla as the world's largest EV producer in 2022. It reported record high NEV output and sales in 2023, each exceeding 3mn units. BYD has stopped producing gasoline-fuelled vehicles since March 2022, opting instead to focus on making BEVs and PHEVs.
Global new energy passenger car sales exceeded 18mn units in 2023, with a 18pc penetration in the world's total passenger car sales. China achieved an over 35pc penetration of new energy passenger cars in its total sales during the same period, according to data quoted by Wang.
There is still "a lot of" room for the Chinese NEV industry to grow in 2024, with an estimated sales increase of 2mn units if this year's average penetration increases to 45pc from 35pc in 2023, Wang said. China's total NEV sales increased to 9.495mn units in 2023, up by 38pc from the previous year, according to data from the China Association of Automobile Manufacturers.
Challenges
The NEV industry is also facing challenges, particularly keener market competition, Wang acknowledged. "The industry has entered a brutal knockout phase," Wang said.
Chinese domestic EV producer WM Motor filed for pre-restructuring in October 2023 as the company faced financial problems. Another domestic manufacturer HiPhi also announced in February that it was suspending production for six months.
Major Chinese EV manufacturers, including BYD, have been announcing deep discounts over the past month, hoping to gain consumer interest and boost sales. Manufacturers have reduced prices for some domestic EV brands by as much as 30pc. Capacity expansions and an increase in market participants could cause more overcapacity problems and trigger even keener pricing competition in the coming years, according to industry participants.
Chinese consumers had less interest in buying NEVs in 2023, despite intense price competition in the domestic market, according to a recent survey by US consulting firm McKinsey. A lack of public charging facilities is the main reason for consumers' dissatisfaction with NEVs, especially in the country's third and fourth tier cities.
