By the end of November 2024, the total volume of New Energy Vehicles (NEVs) in the Chinese market reached a historic high of 9.7 mn units (excluding exports), representing a substantial 39% increase compared to the same period in 2023. NEV market share also continued to climb and accounted for almost half of the market, at 48%.
In contrast, the share of Internal Combustion Engines (ICEs) declined rapidly by 23% year-on-year (YoY). However, the surge in demand and advancements in technology have reshaped the automotive market landscape. Here, we reflect on the evolution of the industry in China throughout 2024 and discuss our expectations for 2025.
Source: GlobalData
In 2024, Chinese NEV development reached a significant milestone. Sales are projected to surpass 10 mn units by the end of the year, while the monthly market share of ICEs has dropped to 37%, showcasing the impact of ongoing technological advancements.
BYD Auto, a key player in the market, has made impressive progress over the past 15 years. From the launch of its first generation DMI system in 2008, it has steadily increased its market share. The latest fifth generation system offers a comprehensive range of 2,100km and has significantly reduced fuel consumption to 2.9L/100km. In addition, BYD has focused on improving the design of its vehicles, making them more attractive to consumers. This, together with its lower vehicle costs, has propelled its popularity and the positive feedback from customers has solidified its leading position in the Plug-in Hybrid (PHEV) market, making it difficult for competitors to challenge. Currently, BYD accounts for nearly 65% of the market, demonstrating its success in meeting consumer needs.
Extended Range Electric Vehicles (EREVs) were another key growth area in 2024. Li Auto has achieved success in the segment, tailoring its products toward a clear target group and implementing an effective pricing strategy. As a result, Li has managed to retain its market position, despite suffering setbacks through its Mega line. In addition, AITO, equipped with Huawei’s advanced intelligent driving system, also performed well during the year. The achievements of Li and AITO have led other OEMs to re-evaluate the benefits of EREVs, prompting local brands to shift their focus away from Mild Hybrids (MHEVs) (48V) and toward EREVs instead.
Source: GlobalData
Despite the rapid development of the NEV market, continued technological support is essential. In November, CATL introduced the world’s first 4C supercharge hybrid battery, known as the Freevoy, designed for use in PHEVs and EREVs. As NEV production volumes ramped up, consumers expressed concerns about the slow charging times for these vehicles. However, the Freevoy battery not only addresses this issue by reducing charging times, but also increases the pure electric range to 400km. In addition, the cost of the Freevoy battery pack is significantly lower than that of Battery Electric Vehicles (BEVs). Furthermore, we anticipate that the overall range will continue to improve in the future.
Cost, range, and intelligence are critical factors in the NEV space. With advancements in technology and shifting consumer preferences, OEMs are actively seeking to meet the evolving needs of the market. In 2025, we expect the Chinese market to be divided into two main camps. One will focus on practical daily vehicle usage, with brands such as Galaxy, Firefly, LYNK & CO, and MI offering vehicles priced around CNY150,000 ($20,500), while the other will be centered on intelligent driving capabilities, with Huawei partnering with local brands to integrate its intelligent driving system. Such partnerships will bring strong competition to Tesla, which aims to implement its Full Self-Driving (FSD) technology by 2025.
The market capacity for PHEVs and EREVs is expected to see continued expansion in 2025. However, achieving market saturation will likely require a new technological breakthrough. In addition, 2025 marks the final year for joint ventures, with some China-specific models from these partnerships set to be launched in 2026, while others face uncertainty in terms of their future direction.
This article was first published on GlobalData’s dedicated research platform, the Automotive Intelligence Center.
“NEV development in China: a review of 2024 and expectations for 2025” was originally created and published by Just Auto, a GlobalData owned brand.
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