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Electric vehicles are expected to sell cars with internal combustion engines in China for the first time next year, in a historic inflection point that puts the world's largest car market years ahead of western rivals.
in China It is set to smash international forecasts and Beijing's official target for domestic EV sales – including clean battery and plug-in hybrids – to grow by around 20 per cent a year to more than 12mn vehicles by 2025, according to the latest estimates provided to the Financial Times . are four investment banks and research groups. This figure could more than double to 5.9mn sold by 2022.
At the same time, sales of conventional vehicles are expected to fall more than 10 percent next year to less than 11mn, which represents a 30 percent decline from 14.8 million in 2022.
For now, EV Sales growth has slowed in Europe and the US, reflecting the traditional car industry's slow adoption of new technology, uncertainty over government funding and rising protectionism against Chinese imports.
Robert Liew, director of Asia-Pacific renewable research at Wood Mackenzie, said China's EV score reflected its success in domestic technology development and securing the global supply chain for critical materials needed for EVs and their batteries. Business scale means lower production costs and lower prices for consumers.
“They want to electrify everything,” said Liew. No other country comes close to China.
While China's EV market growth rate has slowed since the post-pandemic turmoil, estimates show that Beijing's official target, set for 2020, for EVs to account for 50 percent of car sales by 2035, will be achieved 10 years ahead of schedule. of the schedule. . Norway leads the world in EV sales as a market share, with more than 90 percent of new cars equipped with batteries.
Business forecasts were provided to the FT by investment banks UBS and HSBC, as well as research groups Morningstar and Wood Mackenzie.
They say that in the next decade, factories set up in China to produce tens of millions of cars with traditional engines will have almost no domestic market to operate.
They also highlight how the rapid rise of China's EV industry is now threatening the national manufacturing champions of Germany, Japan and the US.
As China's EV market is tracked for annual growth of around 40 percent by 2024, the market share of foreign-branded cars has dropped to just under 37 percent — a sharp decline from 64 percent in 2020, according to the report. data from Automobility, a Shanghai-based consultancy.
This month alone, GM wrote down more than $5bn of its business value in China; the holding company behind Porsche has warned of a write-down on its Volkswagen stake of up to 20bn euros; and rivals Nissan and Honda say they are responding to a “significantly changing business environment” and integration.
Chinese automakers are facing their own internal competition. Yuqian Ding, a Beijing-based analyst with HSBC, said that while EVs are now “strategically important” to China's new economy, high competition was expected to “squeeze” many players out of the market like the industry. combined.
“While China's domestic EV sector is clearly growing, it is also facing slow growth – from a very high base – extreme models, fierce competition and a price war,” he said. “The long-term direction of travel is clear – China's EV juggernaut is unstoppable.”
Tu Le, founder of consultancy Sino Auto Insights, said the industry is at the “beginning” of an era of unprecedented turbulence.
Vincent Sun, an equity analyst who covers China's auto sector at investment research group Morningstar, noted that international automakers, including Germany's Volkswagen, did not expect to release large EV models in China until late 2025 or 2026.
HSBC estimated about 90 models of new cars are scheduled to be released by Chinese manufacturers in the fourth quarter of 2024 – about one per day – and almost 90 percent were EVs.
Meanwhile, Paul Gong, head of China auto research at UBS, warned that there was uncertainty about China's broader economic policy going into 2025 and predicted that the market would have a “weak start to the year” after a strong finish to 2024.
But he added: “We expect . . . a strong increase in purchases at the end of 2025, driven by the end of subsidies and the imposition of a tax of 5 percent on the purchase of electric cars in 2026 – compared to 0 percent until the end of 2025. “
Additional reporting by Richard Milne in Oslo