Surpassing Ten Million: Sustained Growth Momentum in China's New Energy Car Industry

In 2024, China's new energy car market reached an extraordinary milestone, with annual production and sales surpassing the ten million mark for the first time. The penetration rate of new energy passenger cars consistently exceeded 50% for several consecutive months. Looking ahead to 2025, the market is poised to continue its rapid growth, driven by policy support, technological advancements, and structural adjustments, which will serve as strong catalysts for the development of the electric vehicle (EV) industry.

On November 14 in Wuhan, China, the new energy car industry celebrated a significant achievement: the rollout of complete vehicles by Dongfeng Motor's Dongfeng Lantu and ten other car companies, marking China’s first annual production exceeding 10 million new energy cars. The latest forecast from the China Association of Automobile Manufacturers indicates that total car sales in China will likely reach 31.5 million units in 2024, with 13 million expected to be new energy cars.

The evolution of China's new energy car industry is notable—from its inception in 2009, surpassing one million in annual production and sales by 2018, crossing the five million threshold by 2022, and now reaching ten million. Each milestone signifies sustained growth in both market penetration and consumer acceptance. Data from the China Automobile Dealers Association (CADA) shows that since mid-2024, domestic retail penetration of new energy passenger cars has exceeded 50% for five straight months.

New energy car companies are celebrating numerous successes: BYD saw its 10 millionth new energy car roll off the production line, and the Aito M9, co-developed by Huawei and Seres, has been the top-selling car in the above-500,000-yuan segment for eight consecutive months. Li Auto is among the new forces in China's automobile industry, achieving the production and delivery of one million units.

However, the year has also seen ongoing price wars in the EV market, highlighting issues of "volume without revenue" and "revenue without profit," drawing significant attention from market analysts. According to the National Bureau of Statistics, total retail sales of automotive goods in the first eleven months reached 4.4763 trillion yuan, a 0.7% decrease year-on-year. CADA President Xiao Zhengsan noted the pronounced disparity between the retail value and volume of cars, reflecting common issues of price inversions across the industry, which may heighten the risk of deficit operations for companies.

Intelligent Driving as a Competitive Edge

Under the accelerating influence of the technological revolution, represented by artificial intelligence, smart driving is infusing new energy into the development of electric vehicles. Dongfeng Motor Group's Deputy General Manager, You Zheng, noted that 2024 marked the acceleration of smart connected cars in China. The first half of the year saw the penetration rate of new L2-level smart driving cars reach 55.7%, with expectations for over 60% penetration of smart connected vehicles by the year's end.

A report by Zhongtai Securities highlights 2024 as the foundational year for whole-vehicle smart driving, with the maturity and commercialization of smart driving technology signaling a new phase for the industry. This transition results from technological advancements, policy support, and burgeoning market demand. Globally, automobile manufacturers and technology firms are rapidly positioning themselves in the smart driving domain to capitalize on this emerging market.

Experts assert that intelligence will be a key determinant in new energy car developments. Horizon Robotics President Chen Limin echoed these sentiments, emphasizing that smart navigation and driving are now penetrating vehicles priced below 200,000 yuan, marking a critical pre-growth phase for high-end intelligent driving.

Advancements in intelligent driving could also help the industry move beyond price wars. Liu Luochuan, Director of Dongfeng Motor’s Strategy Planning and Technology Development Department, highlighted to China Securities Journal that relying solely on price wars cannot build enduring competitiveness. Successful car companies leveraging advanced intelligent driving technologies are crafting distinguished "competitive advantages," attracting customers despite higher prices. Conversely, companies lagging in these technologies struggle to gain consumer favor, even with significant price reductions.

Amid this backdrop, car companies are intensifying research and development investments in intelligent driving technologies. For instance, BYD allocated 33.3 billion yuan to R&D in the first three quarters, marking a 34% year-on-year increase and setting a historical record. BYD’s intelligent driving team includes 4,000 engineers, of which 3,000 are software engineers. As of September, BYD equipped over 3.5 million vehicles with L2 smart driving systems.

Opportunities and Challenges Ahead

Looking forward to 2025, the new energy car industry is set to maintain its robust growth trajectory. On December 30, Zhang Yongwei, Vice Chairman and Secretary-General of the China EV100, projected the overall Chinese car market to be stable, with total sales anticipated around 32 million units. Roughly 16.5 million of these will be new energy cars (including exports), representing an annual growth rate of nearly 30%, with a penetration rate exceeding 50%. Domestic sales of new energy cars are expected to reach 15 million, with a penetration rate surpassing 55%.

The momentum for new energy car growth remains strong, fueled by supportive policies and technological advancements. The Central Economic Work Conference endorsed issuing ultra-long-term special government bonds to support major projects and new policy implementations. Cui Dongshu, Secretary-General of the China Passenger Car Association (CPCA), noted that the "new policies" of 2024 effectively stimulated car consumption, with continuous efforts expected to sustain growth into 2025.

In addition to policy support, technological incentives are set to inject significant dynamism into the new energy car sector. You Zheng emphasized that car companies are increasing investments in smart driving, promoting the adoption of advanced driver assistance systems and large model technologies, accelerating L3 autonomous driving deployment, and driving car-road-cloud coordinated development trends. Chen Limin predicted that 2025 will mark a turning point for advanced intelligent driving, with high-level autonomous driving technologies becoming standard features within five years.

Adjustments in product structure also offer promising forecasts. In the first eleven months, sales of pure electric models rose by 15% year-on-year, while plug-in hybrid electric vehicles surged by 85.2%. Cui Dongshu believes China's new energy car market will primarily be driven by plug-in hybrid models in 2025, where leading technology and substantial cost reductions will provide a decisive competitive edge. These models are expected to perform strongly in both domestic and international markets.

Despite the optimistic outlook for 2025, the new energy car industry still faces numerous challenges, including intensified competition and the substantial burden on automakers to innovate. Jixuehong, Director of the Automotive Industry Innovation Research Center at North China University of Technology, stated that since 2017, the market capacity and scale of China's new energy car market have become increasingly defined. As competition intensifies, industry consolidation trends are becoming apparent, leading to a reduction in the number of brands. Combining technological innovation to increase prices and large-scale production to lower costs is essential for ensuring long-term competitiveness. In this fiercely competitive market, automakers must continue to push technological boundaries while reducing costs.