In 2020, the Chinese government set a goal for EVs to account for 50% of new car sales by 2035
December 27, 2024 at 13:55
- Up to 12 million EVs are expected to be sold in China by next year.
- Sales of ICE-powered vehicles may drop by as much as 10% in 2025.
- Demand for PHEVs is expected to jump, but won’t keep pace with EVs.
The electric vehicle revolution isn’t coming, it’s already here, and nowhere is this more evident than in China. In just a few years, the world’s largest car market has flipped the script on internal combustion engines, with sales of EVs, plug-in hybrids, and hybrids chipping away at the dominance of traditional gas-powered cars. By 2025, EVs alone are set to outsell ICE vehicles for the first time.
EV Sales Are Skyrocketing
According to forecasts from investment heavyweights like UBS, HSBC, Morningstar, and Wood Mackenzie, China’s EV sales are expected to hit 12 million units in 2024, a massive 20% jump from 2023. Meanwhile, ICE sales are predicted to nosedive by 10%, falling below 11 million units. If these numbers hold, EVs won’t just overtake ICE cars, they’ll obliterate official goals.
In 2020, the Chinese government set a target for EVs to account for 50% of new car sales by 2035. At this pace, the country will blow past that milestone a full decade early.
Read: China Becomes First Country To Hit 1 Million Monthly EV Sales
When the cross-over point is reached next year, electric vehicles will continue to surge and could exceed 18 million by 2034, data published by The Financial Times suggests. Meanwhile, sales of ICE models will follow a downward trajectory and, in 2034, could drop to as low as 2.93 million. In 2025, more PHEVs are also expected to be sold than any year previously, reaching 4.39 million, and may grow steadily to a peak of 6.05 million in 2033. Traditional hybrids may hover between 730,000 and 1 million units over the coming decade.
However, while strong EV sales are predicted well into the future, increasingly stiff competition will likely squeeze out many brands as the market moves towards consolidation.
“While China’s domestic EV sector is clearly flourishing, it is also facing slowing growth — from a very high base — models oversupply, intense competition and a price war,” says HSBC analyst Yuqian Ding. “The longer-term direction of travel is clear — China’s EV juggernaut is unstoppable.”
In short, the EV gold rush is evolving into a cutthroat survival game. The winners? Likely the automakers that can deliver high-quality EVs at the most competitive price points.
China’s dramatic shift to EVs also means that existing factories producing millions of ICE vehicles will have very little domestic market to serve. Foreign brands will also feel the pinch. In 2024, the market share of foreign cars plunged to just 37%, compared to 64% in 2020.
This demonstrates Chinese buyers’ increasing preference for local vehicles in the planet’s largest new car market, which results in German, Japanese and US manufacturers seeing a significant source of revenue diminished.
