China’s EV sales set to overtake traditional cars years ahead of west

Electric vehicles (EVs) are expected to outsell traditional internal combustion engine (ICE) vehicles in China for the first time next year, marking a historic turning point for the world’s largest car market. This shift is anticipated to occur well ahead of Western counterparts, signalling China’s dominance in the global electric vehicle industry, reported Financial Times.

According to the latest estimates shared by four investment banks and research groups, EV sales in China – encompassing both pure battery-electric vehicles and plug-in hybrids – are forecast to rise by approximately 20% in 2025, reaching over 12 million units. This would more than double the 5.9 million EV sold in 2022. In contrast, sales of traditional vehicles are predicted to decline by more than 10%, dipping below 11 million in 2025, a near 30% drop from the 14.8 million sold in 2022.

This dramatic surge in EV sales is a direct reflection of China’s rapid advancement in domestic technology and its ability to secure global supply chains for critical resources like lithium and cobalt, which are essentially for EVs and their batteries. The scale of China’s manufacturing capabilities has also driven down production costs, making EVs more affordable for consumers, according to Robert Liew, Director, Asia-Pacific renewable research at Wood Mackenzie.

“No other country comes close to China,” Liew stated, highlighting the country’s determination to electrify every sector of its economy. The country’s aggressive push toward EV adoption is expected to see its official target of having EVs account for 50 percent of total car sales by 2035 achieved a decade ahead of schedule.

Whiel China’s EV growth has eased from the post-pandemic surge, the industry remains on track to exceed expectations. Estimates from investment banks such as UBS and HSBC, along with research groups like Morningstar and Wood Mackenzie, forecast China’s electric vehicle market to continue expanding at a strong pace in the coming years.

The shift away from traditional vehicles is a troubling sign for foreign automakers. As of 2024, the market share of foreign-branded cars in China fell to a record low of 37 percent, down from 64 percent in 2020, according to Automobility, a Shanghai-based consultancy. This decline signals a rapid shift in consumer preference towards homegrown Chinese brands, which are increasingly dominating the EV sector. At the same time, legacy carmakers in Europe and the US face slowing sales growth as they struggle to adapt to new technologies and shifting market dynamics.

China’s EV market growth is not without challenges. Internally, the industry faces intense competition, oversupply of models, and price wars as domestic manufacturers jockey for position. According to analysts, while the domestic EV sector is thriving, it is also starting to experience slowing growth from a high base. “The longer-term direction of travel is clear – China’s EV juggernaut is unstoppable,” they say.

Another equity analyst pointed out that several major foreign carmakers, including Volkswagen are not expected to release significant new EV models in China until 2025 or 2026. While domestic manufacturers are preparing to release a flurry of new EV models. According to HSBC, around 990 new car models – nearly all of them EVs – are scheduled for release in the fourth quarter of 2024, equating to roughly one new model a day.

Despite this robust pipeline, Paul Gong, head of Chinese automotive research at UBS, cautions that some uncertainty remains over China’s broader economic policy heading into 2025, as government subsidies for electric vehicles are set to expire and a 5 percent purchase tax on EVs is set to be introduced in 2026.

China’s rapid rise in EV sector not only reflects its technological and economic advancement but also signals the potential for a shift in global automotive power. As it continues to innovate and scale its EV production, traditional automotive giants will need to adapt quickly or risk falling behind in a market that is increasingly defined by electric mobility.