China's NEV Surge: Half of July Sales in Auto Market Are Electric or Hybrids

In July, half of the vehicles sold in China were either electric or plug-in hybrids, representing a significant milestone in EV adoption in the world's largest auto market. Sales of new energy vehicles jumped 37% compared to last year, with significant investments driving domestic growth and impacting foreign brands.

In a landmark moment for the world's largest auto market, half of all vehicles sold in China in July were either new pure electric vehicles (EV) or plug-in hybrids, according to industry data. The surge highlights China's lead over Western countries in the adoption of EVs.

Data from the China Passenger Car Association (CPCA) showed that sales of new energy vehicles (NEVs) jumped 37% from a year earlier, marking a record 50.7% of total car sales. This is a stark contrast to three years ago when NEV sales were only 7% of the market. Investment in EV supply chains has significantly boosted the domestic EV industry, leaving foreign brands struggling to catch up.

In comparison, in the United States, electric and hybrid vehicle sales accounted for just 18% in the first quarter of this year. The rapid pace of NEV growth in China accelerated from a 28.6% surge in June, with pure electric vehicle sales growing 14.3% in July, compared to 9.9% in June.

Local brands like BYD and Li Auto saw solid growth, setting new monthly sales records despite an overall 3.1% decline in domestic car sales. Weak consumer confidence amid a struggling economy contributed to this trend. In response, China's state planning agency announced increased cash subsidies for vehicle purchases and some cities relaxed car purchase restrictions to boost sales.

The auto market's competitive landscape is stabilizing as automakers protect profit margins. BYD continued to offer discounts in July, although less aggressively, signaling a potential easing of the price war. Vehicle exports rose 20% year-on-year in July, but with slower growth compared to June's 28%, as China-made EVs brace for provisional EU tariffs.

(With inputs from agencies.)