On Feb. 2, Cui Dongshu, secretary-general of the China Passenger Car Association (CPCA), reported that China’s world market share of new energy passenger vehicles has reached 53%. The total sale reached 6.23 million units, up 118 percent from a year earlier.
Those vehicles include plug-in hybrids, battery-electric vehicles, and fuel cell vehicles.
Why it matters
Now, China has the world’s largest automotive market, surpassing Europe last year to regain its position as the largest contributor to global new energy passenger vehicle sales.
China’s position in the new energy vehicle (NEV) market was threatened by Europe because of the policy environment and the Covid-19 epidemic in 2020, according to Cui.
However, China’s NEV market gradually recovered in the second half of 2020.
By the fourth quarter of last year, China’s contribution to global NEV sales increased to 60 percent as the European market was impacted by the Covid-19 outbreak, according to Cui.
Cui further suggests the reason might be that China’s NEV market shifted to market-based forces, gaining strong endogenous growth momentum.
Looking at the penetration of NEVs in major global regions, China was at 13 percent in 2021, much higher than the 5 percent in 2020 and the 1 percent in 2016, according to the report.
In 2022, it is estimated by Soochow Securities that the domestic sales of new energy passenger vehicles would surpass 5,500,000 and the penetration surpasses 25%. In total, domestic new energy vehicles are expected to reach 6,000,000.
Reasons for growth
The dramatic increase in NEV sales has two main reasons:
- First, there is a steadily increasing production for NEV’s raw materials: lithium batteries. China’s market share of lithium batteries has also been increasing.
- Furthermore, NEVs are more accepted by the public. Soochow Securities suggested that the public has been welcoming the trend of electrification. The acceleration of electrification will increase demand for NEVs.