Why the Chinese new energy vehicle (NEV) market has made significant progress in recent years?

The Chinese new energy vehicle (NEV) market has made significant progress in recent years, with both production and sales reaching new highs. According to the China Association of Automobile Manufacturers (CAAM), in 2023, the production of NEVs reached 9.587 million units, and sales amounted to 9.495 million units, representing year-on-year increases of 35.8% and 37.9%, respectively. In the first five months of 2024, NEV sales reached 3.89 million units, a year-on-year growth of 32.5%. Particularly in May 2024, 960,000 NEVs were sold, marking a year-on-year increase of 33.3% and a month-on-month increase of 12.4%.

In terms of power sources, the Chinese market is dominated by battery electric vehicles (BEVs), while the share of plug-in hybrid electric vehicles (PHEVs) is gradually increasing. From January to May 2024, BEV sales amounted to 2.407 million units, making up 62% of the total sales, whereas PHEV sales were 1.486 million units, accounting for 38%. Regarding price range, NEV sales were primarily concentrated in the 150,000 to 200,000 RMB range, with cumulative sales of 1.028 million units from January to May 2024, accounting for 27.8% of total sales.

Regarding specific models, the top-selling models in May 2024 for each price range were: Haima (34,000 units) for under 80,000 RMB, Qin PLUS (49,000 units) for 80,000-150,000 RMB, Song PLUS New Energy (33,000 units) for 150,000-200,000 RMB, Model Y (40,000 units) for 200,000-300,000 RMB, and Wenjie M9 (16,000 units) for the above 300,000 RMB category.

In terms of battery technology, lithium iron phosphate (LFP) batteries account for nearly 70% of installations in China. LFP batteries are predominantly used in lower-end models, while high-end models tend to use ternary lithium batteries. Concerning new models, the Xiaomi SU7 and Zeeker 001 are showing strong market competitiveness with their excellent performance, while BYD has consolidated its leading position in the LFP battery field by launching several new plug-in hybrid and range-extended models. Additionally, the level of autonomous driving technology in NEVs is continuously improving. From January to February 2024, vehicles equipped with Level 2 and above autonomous driving accounted for 62.5% of the NEV market, an increase of 7.2 percentage points year-on-year. The installation rate of intelligent driver assistance systems is also rising annually.

Market penetration rates for NEVs in China are steadily increasing. In 2023, the penetration rate of NEVs reached 31.6%, up 5.9 percentage points from 2022. From January to May 2024, the penetration rate rose to 33.9%, with an even higher rate of 39.5% in May.

In the international market, Chinese NEVs have also performed remarkably well. In 2023, China exported 1.735 million NEVs, a year-on-year growth of 55%. Among these, exports of passenger NEVs reached 1.682 million units, up 62%; BEV exports were 1.545 million units, a growth of 63%, making up 92% of total exports; PHEV exports were 138,000 units, with a 46% increase, accounting for 8% of the total. From January to April 2024, China exported 663,000 NEVs, an increase of 27% year-on-year, of which 649,000 were passenger vehicles, up 30%.