According to a report by Financial Times, electric vehicles (EVs) – inclusive of battery electric vehicles (BEVs) and hybrids – are expected to outsell cars with internal combustion engines (ICEs) in China for the first time in 2025. As the world’s biggest automotive market, the development could mark a significant milestone for electrification.
Analysts from four investment banks and research groups are expecting domestic sales of new electric vehicles (NEVs) – a term that China uses encompassing both BEVs and plug-in hybrids (PHEVs) – to grow in China by some 20% this year to over 12 million vehicles, surpassing both international forecasts and Beijing’s own official targets.
That figure would more than double the 5.9 million NEVs sold in China in 2022. Meanwhile, sales of ICE-powered vehicles are expected to fall by more than 10%, down to less than 11 million units. At this pace, the nation’s original target for NEVs to account for 50% of car sales by 2035 could be achieved a decade ahead of schedule, despite the fact that sales of NEVs have eased from the post-pandemic frenzy.
The growth of NEVs in China is a stark contrast to the European and other Western markets, where consumer interest for electric vehicles have been mostly mixed. Analysts attribute the boost in electrified vehicles in China to the significant government subsidies, as well as aggressive price wars between domestic NEV manufacturers.
According to Financial Times data, BEV sales alone – estimated to be around 9.35 million units this year – could already overtake ICE vehicles in 2025. That said, a major driving force behind the rise of NEVs in China is the increasing consumer interest in PHEVs, which has grown by some 70% last year, according to a report by the International Energy Agency (IEA).
Chinese carmakers are hoping to replicate their domestic sales growth in oversea markets, with a significant increase in export activity in the past year. While it is currently the world’s largest car exporter, significant headwind is expected in 2025 due to the impact of Western tariffs on Chinese imports.
The EU has imposed a 45% tariff on Chinese EVs over a five-year period starting in October 2024, resulting in a 42% drop by value in EV exports in November 2024, their lowest level since July 2022. This is further compounded by the United States, where its government has also raised tariffs on Chinese EVs to 100% back in May last year.
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