In 2024, for the first time, it is expected that more electric vehicles (EVs) will be sold in China than traditional internal combustion engine vehicles. According to a Financial Times report based on data from investment banks like UBS and HSBC, and research groups such as Morningstar and Wood Mackenzie, China is projected to sell over 12 million EVs next year. This marks a 20% increase from this year and more than double the 5.9 million units sold in 2022. In contrast, sales of conventional cars are expected to decrease by over 10% to less than 11 million units, a significant drop from 14.8 million units in 2022.
This shift could see China achieving its goal of having 50% of all car sales be electric by 2035, a target reached 10 years earlier than planned. Robert Liu from Wood Mackenzie stated that China’s milestone indicates its success in developing its own technology and securing global supply chains for essential EV resources, a feat that other countries have not matched.
With this rapid transition, the presence of manufacturing plants for internal combustion vehicles in China might become negligible in the coming decade. Automobile consultancy firm Automobility forecasts a 40% growth in the Chinese EV market this year, while foreign car brands’ market share in China is expected to hit a historic low of 37%, down from 64% in 2020.
Foreign brands are struggling in China; GM has recorded over $5 billion in losses this month, Volkswagen forecasts losses up to 20 billion euros, and competitors like Nissan and Honda are merging to adapt to the fast-changing landscape.
China’s rapid EV shift contrasts with a slowdown in EV sales in Europe and the U.S., where traditional automakers are slow to adopt new technologies and uncertainties over government subsidies persist. Moreover, protectionism against Chinese products is rising. FT anticipates that next year, China will pull historically ahead of its Western competitors, becoming the leader of the global automobile market.
Internally, competition among Chinese manufacturers is expected to intensify. HSBC reports that roughly 90 new car models, 90% of which are EVs, will be launched in China in Q4 2023. The bank highlighted the strategic importance of EVs in China’s high-tech economy and noted that despite thriving conditions, the market faces an oversupply of models and fierce competition leading to price wars, which could slow growth.