In a notable shift, China’s new energy vehicle (NEV) sales witnessed a steep decline of 38.8% compared to the previous month, marking the first such drop since August 2023, according to industry data. This decline comes despite a renewed push for discounts led by Tesla, as demand in the world’s largest auto market showed signs of faltering.
NEV refers to vehicles primarily powered by electric energy, including plug-in electric vehicles such as battery electric vehicles and plug-in hybrid electric vehicles.
Data from the China Association of Automobile Manufacturers (CAAM) reveals that total vehicle sales, including exports, reached 2.44 million units in January. While this reflects a 47.9% increase from the previous year, it represents a significant 22.7% decline from December, marking the first slide since November.
NEV sales, accounting for 29.9% of total sales, saw robust growth of 78.8% year-on-year in January, as per the data provided.
The CAAM data tracks sales to dealers and encompasses commercial vehicles like trucks unless specified.
The subdued performance in January is reminiscent of last year’s challenges, where passenger vehicle sales in China plummeted 37.9% year-on-year and 40.4% month-on-month, marking the weakest January performances since the 2000s. This downturn was attributed to the expiration of subsidies and tax cuts, as well as shortened business days due to the Chinese New Year falling in January.
In January 2024, China exported 443,000 vehicles, constituting 18.2% of total sales. Notably, nearly one out of every seven NEVs sold during the month was also exported, reflecting the growing importance of exports for Chinese automakers amid weakening domestic demand.
However, China’s burgeoning role as a vehicle exporter has sparked tensions abroad, with the commerce ministry recently expressing intentions to support the NEV industry in navigating foreign trade restrictions and fostering collaboration with overseas firms, amidst an ongoing European probe into Chinese subsidies for the sector.
The lackluster start to 2024 for China’s auto market underscores subdued consumer demand amid a prolonged housing downturn and market volatility.
In response to the challenging market conditions, Tesla implemented price reductions on some Model 3 and Y cars in China in January, reversing previous upward adjustments. Its main competitor, BYD, observed NEV sales totaling 201,493 units in January, the lowest since March 2023, despite a year-on-year increase of 33.14%.
Other players in the EV market, such as Geely and Huawei-backed Aito, reported mixed performance in January, with Geely selling a total of 213,487 vehicles and Aito experiencing a significant surge in deliveries compared to the previous year.
Total NEV sales by Volkswagen’s joint ventures in China with SAIC and FAW saw a remarkable increase in January, nearly quadrupling from the previous year to 19,428 units. This surge was attributed to the popularity of Volkswagen’s ID.3 hatchback, which saw monthly sales surpassing 10,000 units after a price cut in July.