New data from a China Passenger Car Association report showed a record 50.7% of Chinese cars purchased in July were so-called new energy vehicles, or NEVs, meaning they were either electric vehicles or plug-in hybrids.
The report provided several numbers demonstrating how China is expanding its global lead in EV adoption.
Sales of NEVs increased 37% compared with July 2023, building on a 28.6% increase in June. Pure electric vehicles also saw sales increase by 14.3% in July, after climbing by 9.9% in June.
Just three years ago, NEVs made up only 7% of total vehicle sales in China compared to the 50.7% reported this year for July.
In comparison, electric vehicle and hybrid vehicle sales made up 18% of U.S. total vehicle sales in the first quarter of 2024, according to the U.S. Energy Information Administration.
John Helveston, assistant professor at George Washington University, says there are several factors why China has adopted EVs at a rate much higher than the West.
One such factor is a culture more accepting of EVs, he told VOA in a written statement: “Chinese consumers are simply more willing to adopt EVs compared to US consumers.”
“Far more Chinese buyers are first-time buyers, and the expectations of what a car should be are different compared to places like the U.S. where car culture has been around for a century [compared to just a few decades in China],” he wrote.
Helveston also said accessible alternatives to longer-distance travel through the “world’s most extensive high-speed rail network” and China having “largest [EV] charging network in the world” makes it easier for EVs to fit into Chinese consumers’ lifestyles.
Stephen Ezell, vice president for global innovation policy at the Information Technology and Innovation Foundation, or ITIF, said government subsidies on the producer side are key as well.
“China’s massive subsidization certainly has driven down costs, and enables Chinese companies to persist in the marketplace without having to earn market-based rates of return … and those lower prices have certainly helped them boost sales,” he told VOA in a statement.
In a previous report, Ezell detailed how EV companies in Beijing do not need to put as much emphasis on profits when compared to other market-based rate of return companies.
“A key reason why Chinese subsidies to the EV sector (just like any other advanced-technology sector) are so pernicious is that they enable Chinese companies to both sustain themselves in industries where they wouldn’t be able to subsist if they had to earn market-based rates of return and, similarly, sell products below cost and sustain losses while still being able to build economies of scale,” he wrote.
Despite China hitting milestones with its EV adoption, Beijing’s automobile industry as a whole took a hit in July as domestic car sales fell 3.1%.
July marked the fourth consecutive month where domestic cars sales fell amid weakened consumer confidence and an ongoing property market crisis.
Beijing announced in late July that it would double down on subsidy programs first introduced in April, offering cash subsidies of up to $2,785 (20,000 yuan) per purchase to help boost automobile sales.
In addition to the subsidies, some cities with curbs on car purchases are cutting down on their restrictions. For example, Beijing announced last month it would be expanding its NEV license quota by 20,000.
Helveston said city-level policies have been one of the driving factors allowing Beijing to progress rapidly in terms of EV adoption.
“Many Chinese cities restrict driving, like only allowing driving during certain hours or days of the week, and many limit license plates, often through lotteries or auctions,” he explained to VOA.
“Local city governments have used these policies to promote EV adoption, like allowing EV drivers to drive any day of the week or making the license plate much easier to obtain. All of these combined make an environment where EVs are both the more affordable option and more useful option,” he said.
China’s leading EV producer, BYD, and Li Auto, another large EV producer in China, set new monthly sales records in July.
Beijing’s EV exports in July rose 20% year over year — down slightly from June’s 28% increase amid the European Union’s provisional tariffs on EVs.
