In This Article:
China’s new energy vehicle (NEV) market raced ahead last year, fueled by government subsidies and evolving consumer preferences, underlining the nation’s commitment to green mobility. However, challenges such as an ongoing price war, strained profitability and geopolitical tensions will shape the industry’s trajectory in 2025.
Record-Breaking NEV Sales in 2024: BYD Leads the Way
China’s NEV sales totaled more than 11 million units in 2024, marking a 40.7% year-on-year increase, according to the China Passenger Car Association (CPCA). December alone saw over 1.3 million units sold, a 37.5% year-on-year rise and the fifth consecutive month of over one million sales. NEVs accounted for nearly half (47.6%) of all retail vehicle sales in the country last year, reflecting a strong consumer shift toward sustainable transportation.
Total vehicle sales in China grew 5.5%, reaching nearly 22.9 million units. This robust performance highlights the resilience of the automotive sector despite economic headwinds and intense competition. Industry leaders like BYD Co Ltd BYDDY, Geely and Xiaomi reaped the rewards, with BYD alone shipping a record 4.27 million electric and plug-in hybrid vehicles globally. BYD solidified its dominance with a one-third share of the Chinese NEV market.
China EV companies NIO Inc. NIO, XPeng XPEV and Li Auto LI registered more than 30% year-over-year growth in deliveries for full-year 2024. Li Auto delivered 500,508 vehicles last year, up 33% from 2023 levels. With over 500,000 annual vehicle deliveries within just five years of the company’s first delivery, LI has set a new benchmark as the fastest-growing premium auto brand in the Chinese market. NIO and XPeng delivered 221,970 and 190,068 units in 2024, indicating an uptick of 30.7% and 34%, respectively.
Italian-American automaker Stellantis’ joint venture with China’s Leapmotor also posted impressive results, doubling sales to 293,700 units. U.S. EV giant Tesla’s TSLA performance was noteworthy as well. Its China sales rose by 8.8% to a record 657,000 vehicles, accounting for 36.7% of its global deliveries—which, in fact, witnessed the first-ever annual decline.
In contrast, traditional automakers like General Motors, Toyota and Volkswagen struggled to maintain market share,losing ground to agile domestic players in an increasingly competitive landscape.
The Persistent Price War
The Chinese NEV market’s rapid expansion has been accompanied by a fierce price war that shows no signs of abating. More than 200 car models saw price cuts in 2024, up from 148 in 2023, said CPCA secretary general Cui Dongshu. This aggressive pricing strategy has weighed heavily on profitability. Sales profit margins for China’s auto industry dropped to 4.4% in the first 11 months of 2024, down from 5% in 2023 and 6.2% in 2020. Suppliers and dealers have also been forced to slash component prices and offer steeper discounts, further eroding margins.