China poised to hit target for electric cars ahead of schedule

China’s electric cars are on track to reach the 20 per cent nationwide penetration goal this year, well ahead of the government’s 2025 forecast, as new models by dozens of competitors lured buyers and spurred owners to switch to zero-emissions vehicles.

Sales of so-called new-energy vehicles more than doubled in November and December, boosting full-year deliveries by 169 per cent to a record 2.99 million units, or 14.8 per cent of new sales in the market, according to data compiled by the China Passenger Car Association (CPCA).

“December marked the time when promotional activities were carried out at car dealers,” said Cui Dongshu, general secretary of the association, whose data excludes commercial trucks and buses. “Sales growth by newenergy vehicles largely outpaced internal combustion engine cars, suggesting these vehicles will continue to replace oil-guzzlers at a fast pace.”

China, which surpassed the United States in 2009 as the world’s largest market for vehicles, also has more cars running on electric batteries than anywhere else, helped by generous subsidies to slash emissions and avert climate change.

Three in five new cars to go on China’s roads may be powered by electricity in 2030, according to UBS, while the government’s forecast is for a 20 per cent penetration rate by 2025.

China’s monthly new-energy vehicle sales broke through the 20 per cent market share for the first time in November, when deliveries jumped by 122.3 per cent from a year earlier to 378,000 units. December sales rose by 138.9 per cent to 505,000 units, or 22.6 per cent of total sales for the month.

The CPCA saw signs of robust growth, revising its 2021 newenergy vehicle sales target to 2.4 million units in June from a February forecast of 2 million.

China’s car sales increased by 4.4 per cent last year to 20.15 million units, the first annual growth since 2017, according to the association’s data.

Up to 200 car assemblers and start-ups now compete in the country’s new-energy vehicle market, where monthly sales are dominated by a small elite group comprising Tesla, BYD, General Motors’ three-way venture SAICGM-Wuling, as well as New Yorklisted start-ups Nio, Xpeng Motors and Li Auto.

Mini new-energy vehicles with a driving range of less than 200km and smart cars fitted with high-performance batteries that can go as far as 600km on a single charge are all well received by customers.

Tesla is the sales bellwether in the premium segment, but domestic brands such as Xpeng and Nio are snapping at its heels with cars that feature autonomous driving and advanced in-car entertainment systems.

“Beijing’s efforts to encourage purchases of green cars have paid off and the momentum will pick up pace in 2022,” said Cao Hua, a partner at private equity firm Unity Asset Management. “The consensus forecast is that newenergy vehicle sales could double last year’s figure in 2022.”