Reaching New Heights of 16 Million Units with Comprehensive Smart Technology Integration

According to data from the China Automotive Industry Association, vehicle sales in China are expected to reach 31.436 million units in 2024, making it the global leader for the 16th consecutive year. Among these, sales of new energy vehicles (NEVs) are projected to hit 12.866 million units, marking the first time China achieves annual sales exceeding 10 million units, while continuing to lead in global sales for a decade. This remarkable achievement strengthens the determination of the Chinese automotive industry to expand and enhance its competitiveness, emphasizing both quantitative growth and qualitative leaps within the industry.

As the sales figures elevate to a new peak, the Chinese automobile industry will face fresh challenges, including renewed price wars, competition in smart technology advancements, overcoming export restrictions, ensuring self-sufficiency in automotive chips, the entrance of joint ventures into the market, profitability struggles for new energy vehicle companies, and mergers within the automotive supply chain. Each of these areas will test the resilience and adaptability of local automakers and their supply networks.

Trade-In Programs Boost Annual Sales to 32.9 Million Units

Since hitting a low point in 2020, the Chinese automotive market has gradually rebounded year over year. By 2025, it is projected to celebrate its fifth consecutive year of growth, with sales expected to range between 32 million to 32.9 million units, slightly lower than earlier expectations of 33 million. This indicates a mild yet steady increase in sales.

In 2025, the trade-in policy will continue to be a key driver for maintaining growth in automotive sales. Building on an incremental increase of approximately 6 million units in 2024, measures such as maintaining subsidy levels and expanding the range of eligible vehicles are anticipated to contribute an additional 4 to 5 million units in 2025. With the popularity of electric vehicles (EVs) and plug-in hybrid electric vehicles (PHEVs) on the rise, the industry is set to capitalize on government initiatives.

NEVs Expected to Outpace Combustion Engine Vehicles

The sales of new energy vehicles are forecasted to exceed those of internal combustion engine vehicles for the first time by 2025, reaching approximately 15 to 16 million units. Although the growth rate is projected to slow down, potentially falling below 30% or even 20%, the penetration rate for NEVs is likely to rise from 41% in 2024 to about 51% in 2025, with the penetration rate for passenger electric vehicles expected to reach around 60%.

The primary growth driver for NEVs in 2025 will be hybrid electric vehicles. Leading brands such as BYD, Geely, and Great Wall are enhancing their plug-in hybrid offerings, while the more accessible range-extended electric vehicles will also play a crucial role in market expansion. The share of fully electric models versus hybrids is projected to adjust from 7:3 in 2023 and 6:4 in 2024 to a balanced 5:5 in 2025.

Breakthroughs in Autonomous Driving Technology

Through the smart technology initiatives by major manufacturers and the influx of funding from initial public offerings in 2024, the pace of development in automotive intelligence is set to accelerate significantly. By 2025, the penetration rate for Level 2 (L2) advanced driver-assistance systems is expected to reach 65%, surpassing prior estimates of 50%.

The Chinese automotive industry will witness significant advancements in 2025, particularly with the introduction of Level 3 (L3) autonomous driving capabilities. Pioneers such as Huawei and XPeng are leading the way, with established players like Tesla, NIO, and Li Auto following closely. The expected deployment of NoA (Navigation on Autopilot) and other L3 driving functions will see a significant uptick, with installations anticipated to move from 1.85 million in 2024 to approximately 3.3 million in 2025.

Additionally, several automotive manufacturers are fully embracing a smart transformation. While traditional manufacturers have been cautious due to safety concerns, 2025 will mark a turning point with firms like BYD completing their electrification transformations, allowing for a comprehensive smart upgrade across their vehicle ranges.