The China Association of Automobile Manufacturers (CAAM) expects China's new energy vehicle (NEV) penetration to reach 40% by the end of 2024.The number of users intending to buy an NEV is now on par with those wanting internal combustion engine (ICE) vehicles. Nearly 30% of users surveyed by CAAM and DCar plan to trade in their old vehicles for an NEV within a year, while over 60% deem it "very necessary" to switch to NEVs.
China's NEV penetration has been increasing, driven by decarbonization plans and supportive policies to accelerate EV development, such as boosting production and spurring battery innovations. These efforts aim to catch up with foreign competitors in the global automotive industry.
The NEV penetration reached 26% of total automotive sales in 2022, rising to 31.6% in 2023, 32.8% in March, 36% in April, and 32.4% over January-April. The government aims to raise the NEV share in total vehicle sales to 45% by 2027.However, the industry faces a sales growth slowdown due to challenges. CAAM estimates NEV sales will rise to 11.5 million units in 2024, up 21% from 9.495 million in 2023, slower than the 38% increase from 2022 to 2023.
One main reason for hesitation among potential buyers is the shorter driving range of NEVs compared to gasoline cars. Over 60% of potential battery EV buyers want a range exceeding 500 km, including 20% requiring 700-1,000 km. CAAM expects more than 40% of potential NEV buyers prefer hybrid cars over 31% for battery EVs.
CAAM's report shows most consumers favor NEVs priced between 100,000-200,000 yuan ($13,801-27,603). Providing competitively-priced vehicles requires long-term research from EV manufacturers.
China has introduced new supportive measures to drive NEV sales growth, including a plan to remove purchase restrictions during 2024-25. However, some industry participants doubt the applicability of this plan in major cities like Beijing due to severe traffic congestion.
