China Set to Become World’s Leader in Electric Vehicle Sales by 2025

An analysis has revealed that electric vehicle (EV) sales in China will surpass internal combustion engine vehicle sales for the first time in 2025.

According to the latest data shared with the Financial Times by global investment banks UBS and HSBC and other research groups, EV sales in China next year are expected to grow by about 20% year-on-year to more than 12 million units. In contrast, sales of internal combustion engine vehicles are expected to fall by more than 10% this year to 11 million units.

The media outlet commented on the survey results, noting that the upcoming year would be a major turning point for China, the world’s largest automobile market. It also pointed out the rapid progression of the transition to electric vehicles (EVs) in China compared to the West. The outlet highlighted that consumer interest in EVs is mixed in Europe and the United States, affected by high interest rates and inflation.

Analysis suggests that China’s EV sales benefit from government subsidies and fierce local price competition. In July, China increased the one-time subsidy for all drivers who replace their existing vehicles with EVs from 10,000 yuan (about $1,370) to 20,000 yuan (about $2,740).

Competitive local manufacturers, such as BYD, a Chinese automaker invested in by Warren Buffett, have also aggressively cut prices to encourage consumer purchases. Tesla has responded by lowering vehicle prices in several countries, including China.

However, Chinese EV manufacturers struggle in overseas markets due to high tariffs. In October of this year, the European Union (EU) decided to raise tariffs on Chinese EVs by up to 45% for five years, and the US government also raised tariffs on Chinese EVs to 100%.