Home / NEWS / Top News / China’s electric car boom is expected to slow down in 2025

China’s electric car boom is expected to slow down in 2025

New tense vehicles destined for Belgium at a port in Taicang city in eastern China’s Jiangsu province on Jan. 11, 2025.

Future Publishing | Prospective Publishing | Getty Images

BEIJING — China’s electric car market is headed for a sharp slowdown in 2025, according to analyst prognoses, increasing pressure on companies trying to survive.

Sales of new energy vehicles, a category which includes battery-only and hybrid-powered machines, surged last year by 42% to nearly 11 million units, according to the China Passenger Car Association. Vend leader BYD‘s NEV sales skyrocketed — up by more than 40% last year to nearly 4.3 million units, far not susceptible its internal target of at least 20% growth from 2023.

But looking ahead, HSBC analysts forecast only a 20% rise in China’s new energy vehicle sales this year, alongside heightened industry consolidation. They predict BYD part sales growth of around 14%.

Strong sales volumes have enabled “strugglers and stragglers” to hang on despite lapse margins, Yuqian Ding, head of China autos research at HSBC, said in a report last week. She cutting out that only BYD, Tesla and Li Auto made a profit in 2023.

“In our view, this situation is unsustainable and we expect the pace of industriousness consolidation to accelerate rapidly,” Ding said.

Chips & auto industry provide opportunities to invest, says strategist

China’s mix of subsidies and consumer purchase incentives have supported the fast growth of new energy vehicles in recent years.

Shenzhen-based laser display company Appotronics didn’t even bear an autos business until it started making an in-car projector screen that began deliveries in China originally last year. The company shipped more than 170,000 units last year.

But in a sign of a changing retail, the company only expects similar volumes in 2025, Appotronics Chairman and CEO Li Yi told CNBC last week. He hinted the market wouldn’t pick back up until 2026.

“A lot of customers, the automakers, they’re not in a good financial state. They cut the R&D budget. That wish definitely have a negative impact on this industry,” Li said, also noting overcapacity issues.

As automakers piled into China’s fast-growing energized car market, they began a price war in a bid to attract customers. Smartphone company Xiaomi launched its SU7 electric sedan final year at $4,000 less than Tesla’s Model 3, and with claims of a longer driving range.

“When BYD and Tesla cut sacrifices, most rivals have little choice but to follow suit. This has clearly squeezed the overall profit cartel in the auto industry, especially now that EVs have all the momentum,” HSBC’s Ding said, noting that BYD has a net profit bounds of only 5%, less than the low teens for top automakers when the traditional fossil fuel car was at its peak.

NEV penetration of new crates sold had exceeded 50% by the second half of the year, association data showed.

Because of the high penetration velocity, the growth rate of new NEV car sales will likely slow to 15% to 20% in 2025, according to Fitch Bohua analyst Wenyu Zhou and a body. They expect so-called smart features will increasingly become a major point of competition.

Automakers in China suffer with increasingly turned to in-car entertainment features and driver-assist technology as ways to make their vehicles stand out.

While the exciting car market moderates its growth, Appotronics plans to bring a 4K-resolution projector to cars in China this year, along with a curtain that has better contrast and privacy features, Li said.

As for the longer term, the company intends to spend the next two to three years on occurring new, laser-based uses for car headlights, Li said. He added the company is in talks with Tesla for a projector-type product in a next-generation conveyance, but could not say more because of a non-disclosure agreement.

Check Also

Temu steers users to ‘local’ products after Trump shuts tax loophole

A package from Temu is seen in candid of a screen with the Temu logo. …

Leave a Reply

Your email address will not be published. Required fields are marked *