The Future of China's New Energy Car Market in 2025

In 2024, China maintained its position as the world leader in new energy car production and sales. Looking ahead to 2025, the landscape for battery cars and EVs appears promising. The key challenges that have shaped this market are domestic competition, often described as intense, and international tariff barriers.

Throughout 2024, price reductions dominated the EVauto market as Tesla's initial move sparked a wave of discounts across domestic and foreign manufacturers. Alongside this, Chinese new energy cars faced increased tariffs in markets like the EU, Brazil, Turkey, and the US, affecting export dynamics.

Despite these challenges, projections for 2025 suggest a continuation of growth in the new energy car sector. Analysts anticipate domestic retail penetration of battery cars and EVs to surpass 50%, with an annual sales figure reaching approximately 16 million vehicles. Chinese brands are expected to command 70% of this market, with self-driving technologies becoming increasingly significant in both China and the US. Notably, BYD is poised to exceed 5 million in sales, potentially making it the second largest car manufacturer globally. Meanwhile, companies like Xpeng, Leapmotor, and Zeekr aim to turn profitable.

The Year of High-Level Smart Driving

Globally, autonomous driving is reaching critical milestones. Tesla's Full Self-Driving (FSD) technology has seen its global autonomous driving mileage double in just six months of 2024, reaching nearly 3 billion kilometers by October. The adoption of FSD is growing rapidly, with user numbers soaring from 280,000 in 2023 to over a million in 2024.

In China, Huawei's HarmonyOS achieved 1.2 billion kilometers of intelligent driving in 2024. By 2025, its commercial application is expected to become reality. Baidu’s autonomous taxi service, Robotaxi, has already completed over 8 million orders, marking significant progress in the widespread adoption of autonomous vehicles.

Policy environments in key markets are becoming increasingly supportive. Both China and the US are adjusting regulations to foster smart driving technology, with the US implementing the first Robotaxi regulations and China issuing pilot credentials for intelligent vehicles. As regulatory barriers diminish, 2025 is likely to be the year when advanced autonomous driving truly takes off.

Accelerating Car Manufacturer Competition

The past couple of years have seen a toughening competitive environment for car manufacturers. Companies like WM Motor declared bankruptcy in 2023, followed by Evergrande and HiPhi in 2024. This trend is expected to continue into 2025 as market pressures intensify.

Even with high growth rates in new energy car sales, profitability remains elusive for many. In 2024, while companies reported revenue growth, only BYD, SERES, and Li Auto managed to stay profitable, with others still incurring losses.