Electric car sales projected to reach record six million in China this year

Despite outbreaks of Covid-19 in parts of the country, overall vehicle production and supply chains have largely recovered

Workers assemble a BYD electric car in Huai'an, in east China's Jiangsu Province. Getty

Electric vehicle sales in China are forecast to hit a record six million this year as demand for cleaner cars surges.

The China Passenger Car Association raised its estimate from 5.5 million, after releasing data showing deliveries of new-energy vehicles (NEV) more than doubled in July to about 486,000 units — accounting for 26.7 per cent of the new auto market.

Overall passenger vehicle sales rose 20 per cent from a year earlier to 1.84 million units, the association said on Tuesday.

The increased forecast represents a doubling from last year’s 2.99 million NEV sales, underscoring the dramatic growth in demand for cleaner cars in China, and the challenge for legacy car makers to adapt in a market that is rapidly going green.

The six million forecast is still “relatively cautious”, the association said, adding it could be further increased at the start of the fourth quarter.

Tesla delivered 28,217 cars, with 8,461 going to the local market and 19,756 exported, mostly to Europe and Asia. The sharp drop of 64 per cent from June was mainly caused by production shutdowns to upgrade its Shanghai factory as part of a plan to double annual capacity to one million vehicles.

BYD, which earlier this year ended production of cars powered only by fossil fuels, earlier reported monthly sales of 162,530 units — both pure electric vehicles and plug-in hybrids.

While Tesla and BYD dominate EV sales, smaller start-ups are also making inroads as demand for clean cars surges.

Eight-year-old Hozon New Energy Automobile, which started by aiming at customers outside big cities with budget cars, delivered 14,037 vehicles last month, including 1,382 to overseas markets.

Leapmotor Technologies, which competes in the same price range as Hozon, shipped a record 12,044 cars.

Overall, domestic car makers are grabbing a bigger slice of the NEV market.

The main Chinese brands commanded 73 per cent of NEV passenger car sales last month, up 9 percentage points from a year earlier.

Local upstarts including the likes of Xpeng, Li Auto and Nio accounted for 16.5 per cent, while the main international joint ventures (which exclude Tesla) took only a 6.5 per cent share.

The central and local governments have also taken steps to help the auto industry recover from Covid lockdowns and restrictions that crushed sales earlier this year.

In May, the central government cut purchase taxes on some low-emission passenger vehicles by 50 per cent, while municipal governments have pitched in with subsidies and incentives to entice buyers.

Despite sporadic outbreaks of Covid-19 in parts of the country, overall car production and supply chains have largely recovered.

Passenger-vehicle sales may resume double-digit growth this half, after falling for four consecutive quarters because of supply chain constraints, Bloomberg Intelligence analyst Steve Man said in a recent note.