Jan 10, 2025
China's electric vehicle exports are expected to stop growing in 2025.
China's auto exports are expected to experience a significant slowdown this year after retaining the title of the largest exporter for a second year in 2024, with no growth anticipated for electric vehicle exports, according to a major automotive association.
In 2024, car and light-truck exports are projected to rise by 25 percent to 4.8 million units, as per data from the China Passenger Car Association. This indicates that China is likely to remain the world's top auto exporter, surpassing Japan for the second consecutive year, even amidst new tariffs on Chinese-made electric vehicles imposed by the European Union in late October.
Japan's auto exports decreased by 4.3 percent, totaling 3.82 million vehicles in the first 11 months of 2024, according to the Japan Automobile Manufacturers Association.
However, export growth is expected to moderate to 10 percent this year, with a decline in shipments to Russia worsening tariff pressures in Europe, as stated by Cui Dongshu, secretary general of CPCA, on January 9. He forecasted that exports of electric vehicles would see "zero growth."
Exports of new energy vehicles, which include electric cars and plug-in hybrids, increased by 24 percent last year, reaching 1.29 million.
A year-long investigation by the European Union into subsidies for Chinese-made electric vehicles has impacted exports to the bloc, as the 10 percent growth in the early months fell short of the 36 percent increase seen in 2023, according to the association.
During the first 11 months of 2024, Russia, Mexico, and the United Arab Emirates emerged as the top three markets for light vehicles made in China, as reported by CPCA, while exports to Thailand, Australia, and Britain declined.
While EU tariffs are expected to limit short-term sales of Chinese electric vehicles, establishing production facilities in Europe, such as the one by BYD in Hungary, will aid Chinese car manufacturers in gaining market share in the long run, according to Charles Lester, a research analyst at Rho Motion.
In the domestic market, which is the largest in the world, car sales in China continued to grow in 2024, with sales of electric vehicles and plug-in hybrids reaching record highs, driven by a fierce price war and subsidized trade-ins for greener vehicles that boosted demand.
The robust growth in China amidst a generally stagnating global electric vehicle market is promising for local leaders like BYD, Geely, and Xiaomi and has accelerated a shakeout in the industry.
It has also been beneficial for Tesla, with its sales in China reaching a record high in 2024, despite an overall decline in the U.S. electric giant's global sales.
Conversely, other foreign automakers like General Motors, Toyota, and Volkswagen continue to lose market share to Chinese competitors, struggling to maintain effective capacity utilization at their manufacturing plants in China.
According to CPCA data, passenger vehicle sales rose by 5.3 percent to 23.1 million units in 2024, marking the fourth consecutive year of growth, consistent with the pace set in 2023.
Sales of new energy vehicles surged by 41 percent, accounting for 47 percent of total sales of cars and light trucks last year, approaching the 50 percent milestone, supported by a program similar to the U.S. "cash-for-clunkers" initiative from 2009.
More than 6.6 million cars sold last year benefitted from government subsidies of up to $2,800 for new energy vehicle purchases and up to $2,000 for more fuel-efficient gasoline vehicles. Over 60 percent of subsidized purchases were allocated to new energy vehicles, according to official data.
On January 8, Beijing announced an extension of the auto trade-in subsidies through 2025 as part of a broader consumer trade-in initiative aimed at revitalizing economic growth.
"We anticipate that the vehicle trade-in subsidy program will increase demand by 3.0 million units for the full year 2025," stated Deutsche Bank analyst Bin Wang.
Overall, car sales are projected to grow by 2 percent this year, with new energy vehicle sales expected to rise by 20 percent, accounting for 57 percent of total car sales in China, according to CPCA forecasts.
This suggests that the growth rate for sales of electric vehicles and plug-in hybrids in 2025 could be the weakest since 2021, even though Cui projected that the scale of government subsidies would stay at peak levels this year.
Despite the growth in sales, China's auto industry has faced declining profitability over the years. Profit margins from sales were at 4.4 percent in the first 11 months of 2024, compared to 5 percent in 2023 and 6.2 percent in 2020, according to the association.
Suppliers and dealers also experienced challenges due to a prolonged price war that compelled them to reduce component prices or offer deeper discounts.
In 2024, car and light-truck exports are projected to rise by 25 percent to 4.8 million units, as per data from the China Passenger Car Association. This indicates that China is likely to remain the world's top auto exporter, surpassing Japan for the second consecutive year, even amidst new tariffs on Chinese-made electric vehicles imposed by the European Union in late October.
Japan's auto exports decreased by 4.3 percent, totaling 3.82 million vehicles in the first 11 months of 2024, according to the Japan Automobile Manufacturers Association.
However, export growth is expected to moderate to 10 percent this year, with a decline in shipments to Russia worsening tariff pressures in Europe, as stated by Cui Dongshu, secretary general of CPCA, on January 9. He forecasted that exports of electric vehicles would see "zero growth."
Exports of new energy vehicles, which include electric cars and plug-in hybrids, increased by 24 percent last year, reaching 1.29 million.
A year-long investigation by the European Union into subsidies for Chinese-made electric vehicles has impacted exports to the bloc, as the 10 percent growth in the early months fell short of the 36 percent increase seen in 2023, according to the association.
During the first 11 months of 2024, Russia, Mexico, and the United Arab Emirates emerged as the top three markets for light vehicles made in China, as reported by CPCA, while exports to Thailand, Australia, and Britain declined.
While EU tariffs are expected to limit short-term sales of Chinese electric vehicles, establishing production facilities in Europe, such as the one by BYD in Hungary, will aid Chinese car manufacturers in gaining market share in the long run, according to Charles Lester, a research analyst at Rho Motion.
In the domestic market, which is the largest in the world, car sales in China continued to grow in 2024, with sales of electric vehicles and plug-in hybrids reaching record highs, driven by a fierce price war and subsidized trade-ins for greener vehicles that boosted demand.
The robust growth in China amidst a generally stagnating global electric vehicle market is promising for local leaders like BYD, Geely, and Xiaomi and has accelerated a shakeout in the industry.
It has also been beneficial for Tesla, with its sales in China reaching a record high in 2024, despite an overall decline in the U.S. electric giant's global sales.
Conversely, other foreign automakers like General Motors, Toyota, and Volkswagen continue to lose market share to Chinese competitors, struggling to maintain effective capacity utilization at their manufacturing plants in China.
According to CPCA data, passenger vehicle sales rose by 5.3 percent to 23.1 million units in 2024, marking the fourth consecutive year of growth, consistent with the pace set in 2023.
Sales of new energy vehicles surged by 41 percent, accounting for 47 percent of total sales of cars and light trucks last year, approaching the 50 percent milestone, supported by a program similar to the U.S. "cash-for-clunkers" initiative from 2009.
More than 6.6 million cars sold last year benefitted from government subsidies of up to $2,800 for new energy vehicle purchases and up to $2,000 for more fuel-efficient gasoline vehicles. Over 60 percent of subsidized purchases were allocated to new energy vehicles, according to official data.
On January 8, Beijing announced an extension of the auto trade-in subsidies through 2025 as part of a broader consumer trade-in initiative aimed at revitalizing economic growth.
"We anticipate that the vehicle trade-in subsidy program will increase demand by 3.0 million units for the full year 2025," stated Deutsche Bank analyst Bin Wang.
Overall, car sales are projected to grow by 2 percent this year, with new energy vehicle sales expected to rise by 20 percent, accounting for 57 percent of total car sales in China, according to CPCA forecasts.
This suggests that the growth rate for sales of electric vehicles and plug-in hybrids in 2025 could be the weakest since 2021, even though Cui projected that the scale of government subsidies would stay at peak levels this year.
Despite the growth in sales, China's auto industry has faced declining profitability over the years. Profit margins from sales were at 4.4 percent in the first 11 months of 2024, compared to 5 percent in 2023 and 6.2 percent in 2020, according to the association.
Suppliers and dealers also experienced challenges due to a prolonged price war that compelled them to reduce component prices or offer deeper discounts.