By 2035, sales of new energy vehicles (NEVs) and hybrids in China are expected to grow more than 15-fold, with both models accounting for a combined market share of more than 80 percent of total new vehicle sales, according to a new report by consultancy Wood Mackenzie.
In 2020, new energy vehicles accounted for 6 percent of total new vehicle sales in China, with pure electric vehicles accounting for 5 percent and plug-in electric vehicles accounting for 1 percent.
For the past 10 years, Chinese electric vehicle manufacturers have been protected by policy from direct competition with overseas manufacturers. As China gradually liberalizes restrictions to international automakers and removes subsidies for electric vehicle purchases, the situation will change, the report said.
Introducing more international models and stimulating more efficient and active market dynamics will further boost the development of pure electric vehicles in China, the report said.
Wood Mackenzie expects new energy vehicles and hybrids to dominate new car sales in China through 2035. By 2050, new energy vehicles will account for about 90 percent of new vehicle sales in China, with fuel cell vehicles accounting for about 10 percent.
In the long run, the role of hybrids as a transition to new energy vehicles will diminish, and their market share of new vehicles is expected to decline after 2040, the report said.
By the end of 2022, the Chinese government will eliminate subsidies for new-energy vehicle purchases and instead shift its focus to supporting the construction of electric vehicle charging infrastructure.
Wood Mackenzie believes that nationwide charging facilities are critical to the widespread adoption of electric vehicles.
State Grid and China Southern Power Grid have already directly invested a total of nearly $1 billion to support charging infrastructure. In addition, China Southern Power Grid has committed an additional $3.6 billion in capital investment over the next four years.
"In this regard, we expect China to become the second-largest charging infrastructure country in the world, second only to the entire European market in terms of market volume," the report said.
China's new energy passenger car sales expected to reach 2 million units this year