Chinese Car
Market 2025 – Part 1
According to the China
Association of Automobile Manufacturers, 27.6 million passenger cars
manufactured domestically were sold in 2024. Of this total, around 5 million
units were exported to international markets, highlighting China’s growing
influence as a global automotive exporter.
Overview
Figure
1
illustrates the evolution of passenger car sales in China over the past 19
years. Recent sales figures reflect nearly a fivefold increase compared to
2006. Although sales were significantly impacted by the COVID-19 pandemic, the
market has clearly rebounded, demonstrating resilience and adaptability.
Notably, growth surged to as high as 10% annually during 2022 and 2023,
primarily driven by increased export activity. However, the growth rate slowed
somewhat in the past year, partially due to emerging protectionist measures in
Western countries, where governments began implementing policies to limit
Chinese car imports in an effort to protect their domestic automotive
industries. This shift presents new challenges for China’s continued automotive
export expansion.
Figure 1 Passenger cars sales by China incl. exports 2006 -2024
Source: China Association of Automobile Manufactures
The sales volume of commercial vehicles has not experienced as
strong growth as that of passenger cars (Figure
2). Given that the primary focus of this analysis
remains passenger vehicles, commercial vehicles will not be discussed further
in this report.
Figure 2 China’s commercial vehicles sales incl.
exports 2006 -2024
Source:
China Association of Automobile Manufacture
Top 10
Car Manufacturers
Table 1 displays the sales performance of China’s top ten car manufacturers in 2024, which collectively account for over 60% of the Chinese domestic passenger car market. BYD remains its position as China’s leading car manufacturer. Notably, the gap between BYD and its closest competitor has progressively widened in the recent years, increasing dramatically from 25,536 units in 2022, 859,458 units in 2023, and further expanding to 1,945,030 units in 2024. This underscores BYD’s growing dominance within the Chinese automotive landscape.
While the composition of manufacturers in the top 10 list
remains largely consistent with the previous year, a noticeable shift is
occurring as domestic Chinese brands progressively over take join-venture
brands. Additionally, Tesla has notably entered top 10 for the first time this
year, highlighting the evolving dynamics and intensifying competition within
the Chinese automotive market.
Additional information:
You may recognize some brands that
seem familiar. To better explain the 'reformed' names of these manufacturers,
it's important to mention the renowned 'China Automotive Group Four,' a
state-owned automobile manufacturer (joint venture):
Ø First
Automobile Works (FAW Group)
Ø Shanghai
Automotive Industry Corporation (SAIC Motor Corp)
Ø Dongfeng
Automobile
Ø Changan
Auto
Before Tesla's entry into China, foreign automotive
companies were limited to a maximum 50% ownership in joint ventures with local
firms. For example, SAIC-GM represents the joint venture between SAIC and
General Motors. Despite many years of stimulating and beneficial policies for
the ESG sector, significant progress was not evident. In a notable shift, China
relaxed these restrictions for Tesla by eliminating the 50% ownership cap. This
change coincided with the removal of the ownership limit for foreign companies
within the new energy vehicle sector in 2018, a move that remains a topic of
dispute.
The introduction of Tesla into the Chinese market has significantly motivated local manufacturers and spurred growth in the local automotive industry. Tesla's Giga Shanghai boasts a 95% localized supply chain and has made a resounding impact since entering the Chinese market, embodying a truly win-win strategy. From 2022, China also removed the ownership limits for the entire passenger car sector. For decades, China's efforts to strengthen its automobile industry faced challenges, as foreign manufacturers had centuries of a head start. However, with the advent of the new energy vehicle sector, China has managed to reverse its fortunes and now leads globally in this arena. In 2022, confident in the competitiveness of its local manufacturers, China removed protective measures, opening the doors to global competition. This will inevitably intensify competition but ultimately benefit consumers like us.
New
Energy Car Market in China
Figure 3 New Energy Vehicles Sales (in units) 2019-2024
Figure
3
illustrates the sales of new energy vehicles (NEVs) in China from 2019 to 2024,
encompassing both passenger and commercial vehicles. Commercial vehicles
represent a small fraction of the total NEVs, accounting for around 5% in the
last several years. It is important to note that the category of NEVs includes
Battery Electric Vehicles (BEVs), Fuel Cell Vehicles (FCVs), and Plug-in Hybrid
Electric Vehicles (PHEVs). It excludes other types of hybrids that do not
fulfill the battery range requirements established by the Chinese government.
Figure 4 The top 10 new energy vehicle
manufacturers in 2024 with sales in 2020-2024
https://auto.sina.cn/zz/hy/2023-01-12/detail-imxzvqmf9049024.d.html?vt=4&pos=25
https://www.163.com/dy/article/JLUMDKFM0527828C.html
Figure
4
presents the top 10 sales figures for new energy vehicles in 2024, alongside
their historical sales from previous years. BYD, in particular, has
demonstrated significant growth over the past three years, capturing nearly 34%
of China's NEV market share in 2024. The top 10 NEV manufacturers accounts for
approx. 77% of Chinese domestic NEV sales, underscoring a highly concentrated
and increasingly competitive market environment.
City-Level
Analysis of NEV Sales
Mainland China is composed of 22 provinces, 5 autonomous
regions and 4 municipalities directly administered by the Central Government. The
cities belonging within provinces, regions, municipalities are categorized to “5+1”
tiers, primarily based on the local economies. There are 4 first-tier cities:
Beijing, Shanghai, Guangdong and Shenzhen. Additionally, 15 cities have been elevated
to the status of ‘new first-tier cities’.
presents
data on the population and the number of cars sold, categorized by city types
across China. First-tier cities exhibit a substantially higher percentage of
new energy vehicle (NEV) sales compared to other cities. This is primarily due
to the availability of convenient charging facilities and expedited license
plate processing for NEVs in these cities. Overall, there is a pronounced
upward trend in NEV sales throughout China.
Table
2 The population and the
penetration of NEVs in China by city categories
https://mp.weixin.qq.com/s/D6m_ZNbD0P0XpMpOiLIV0Q
https://mp.weixin.qq.com/s/kRoZWIDn7RgfRnmGw4pA-w
Domestic
sales vs. Exports of NEVs
Exports of
NEVs, including commercial vehicles, have experienced rapid growth over recent
years. The export of NEVs has surged from 76,000 units in 2020 to approximately
1.3 million in 2024. However, the pace of export growth has recently slowed,
largely due to rising anti-Chinese sentiment and protectionist measures enacted
by Western countries. These developments have undoubtedly contributed to the
deceleration in Chinese NEV exports.
Figure 5
New energy vehicles sales by domestic vs. export 2020-2024
Exports
As
illustrated in Figure 6, China’s annual automobile exports
remained consistently at or below 1 million units prior to 2021. However,
export volumes have accelerated significantly since then, reaching 5.9 million
vehicles in 2024. Of these exports, passenger cars represented approximately
85%, while commercial vehicles accounted for the remaining 15%. Notably, nearly
half of exported commercial vehicles were new energy vehicles, whereas among
exported passenger cars, NEVs accounted for only about 17%.
Figure
6 The evolution of China’s
automobiles exports 2008 - 2024
Figure 5 further illustrates the rising
proportion of exports relative to total auto sales. Over the past three years, this
export sales have grown significantly, increasing from less than 5% to over
15%. This trend underscores China’s expanding role as a major automobile
exporter and highlights the increasing international demand for vehicles
produced in China.
Top 10
countries to which China exports automobiles
Figure 7 depicts the distribution of New
Energy Vehicles (NEVs) and Internal Combustion Engine (ICE) vehicles exported
by China to its top 10 destination countries in 2024. Collectively, these
countries accounted for over 50 % of China’s total automotive exports. Notably,
Russia was the leading destination, representing nearly 20% of the total
exports.
Figure
7 Top 10 countries to which
China exported automobiles in 2024
Source: https://mp.weixin.qq.com/s/tFih6gp5nIyAdcmOrSMXcA
While the
penetration of NEVs within China's domestic market has reached approximately 46%,
their share of total vehicle exports remains significantly lower at just 22%. Russia
is China's largest import market. However, NEVs accounted for only 2% of
China's total vehicle exports to Russia in 2024. Conversely, Western countries
generally exhibit a higher preference for NEVs; however, export volumes to
these regions have not grown substantially, with some markets—including the
United Kingdom, Australia, Spain, and the Netherlands—even experiencing declines
in Chinese vehicle imports over the past year. This trend underscores emerging
challenges in sustaining export growth to Western markets.
Overview
of the Structure of Chinese Automobile Exports
Table 4
illustrates the increasing market share of NEVs within
China's total automobile exports, highlighting a clear upward trend. In recent
years, passenger cars have consistently represented more than 80% of China's
total vehicle exports, underscoring their dominant role in the country's
automotive export structure.
Table 4 The structure of Chinese auto exports
Source:
China Association of Automobile Manufactures
Government
Policies on New Energy Vehicles
In 2012, the State Council issued the ‘Energy Efficiency
and New Energy Vehicles Industry Development Plan (2012-2020)’ which set
production targets for new energy vehicles at 500,000 units by 2015 and 2
million units by 2020. However, due to the COVID-19 pandemic, only 1.4 million
new energy vehicles were sold in 2020, falling significantly short of the
target. Sales rebounded in 2021, reaching 3.5 million units. By 2023, sales of passenger
car has surged to 7.3 million units.
In October 2020, the State Council issued ‘the new plan
for new energy vehicle (2021-2035)’. Under this plan, sales of new energy vehicles
are expected to constitute 20% of total automobile sales by 2025. In 2023, the
market penetration of new energy vehicles (NEVs) for passenger cars exceeded
33%.
In October 2021, the State Council issued a notice regarding
action plans for carbon peak by 2030. Specially for transportation sector, new
energy vehicles are projected to constitute 40% of total vehicle sales by 2030.
There are two primary incentives for purchasing NEVs:
purchase subsidies and tax relief. In 2022, the subsidies for new energy cars were reduced by 30%, equating to a
reduction of several thousand RMB. Staring in 2023, these subsidies have
been discontinued. Despite this, NEV manufacturers have
reduced prices several times, partly due to decreased production cost and
partly because of intense price competition. The sales data for NEVs in China
suggests that the withdrawal of subsidies has not adversely affected sales.
The exemption from purchase tax for NEVs, currently capped
at 30,000 RMB, will continue until December 31, 2025. After this date, the
exemption will be reduced to 50%, with a cap of 15,000 RMB for 2026 and 2027.
Subsequently, NEVs will be taxed as normal vehicles at a rate of 10%.
On April 24, 2024, the Ministry of Commerce and seven other
ministries jointly issued Implementation Rules for the Automobile Trade-in
Subsidy. The benefits for newly purchase NEVs are mainly in two aspects:
- For the renewal of new energy buses and power batteries with a vehicle age of 8 years or more, an average subsidy of 60,000 yuan per vehicle will be provided.
- Increase the subsidy standard for scrapping and renewal of vehicles.
On May 15, 2024, the General Offices of the Ministry of
Industry and Information Technology and other five ministries jointly issued Notice
on Carrying out New Energy Vehicle Going to the Countryside Activities in 2024. Under this initiative, multiple provinces
launched targeted campaigns to boost NEV adoption in rural communities,
integrating various supportive measures including incentives for replacing
older vehicles, enhancing local charging and battery swapping infrastructure,
and promoting convenient financial services such as credit, insurance, and
after-sales maintenance support. These combined efforts aimed to accelerate the
widespread adoption of NEVs among rural households. Concurrently, local
governments actively participated by hosting dedicated promotional events,
significantly increasing NEV penetration rates in third-, fourth-, and
fifth-tier cities throughout 2024.
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