Electrified cars have overtaken gasoline and diesel models in China’s vast passenger car market for the first time. In March, so-called new energy vehicles (NEVs), which include battery-electric and plug-in hybrid models, accounted for 51.1% of all retail car sales in the country.
The milestone signals not just the rapid maturation of China’s electric vehicle sector, but also a changing of the guard. Once overshadowed by foreign joint ventures and international giants such as Volkswagen, Toyota, and Tesla, domestic automakers are now firmly in the driving seat.
Spring promotions
March’s surge capped over a decade of sustained state support. Since 2009, Beijing has poured more than $230 billion (€180 billion) into building a homegrown EV ecosystem. While direct consumer subsidies ended in 2022, the momentum has continued unabated.
A dense charging infrastructure network, tightening emissions rules, and restrictions on fossil-fuel vehicles have kept the transition on track.
The numbers tell the story starkly. In March, 72% of all passenger vehicles sold by Chinese carmakers were NEVs. In contrast, foreign joint ventures managed just 6% – a remarkable reversal in what was once their most lucrative market.
New domestic models such as Xiaomi’s SU7, BYD’s Qin L, and Zeekr’s 007 have helped turbocharge sales, aided by temporary government incentives and spring promotions.
Analysts now believe NEVs will maintain a market share above 50% throughout 2025, with projections of a 70% share by the end of the decade – previously, the outlook was half the market by the decade’s end.
Exports at an all-time high
April’s data reinforced the trend, even with a slight dip in absolute NEV sales to 1.23 million units. Market share hit a record 47.3%—up from 42.4% in March—with exports climbing to an all-time high of 200,000 vehicles.
Plug-in hybrids stood out, registering a 140% year-on-year rise in exports. This is a turn of events as the EU’s import levies on full electric cars from China are being circumvented by PHEVs.
BYD remains the dominant player, shifting 380,089 NEVs in April. In a notable first, it sold more pure-electric vehicles than plug-in hybrids, reflecting surging demand across both segments.
Newcomers like Xiaomi and Leapmotor notched up their strongest months yet, while Xpeng extended its streak of 30,000-plus monthly deliveries.
Faltering Tesla sales
Tesla, by contrast, continues to lose ground. The US carmaker sold 28,731 vehicles in China in April, down 8.6% year-on-year and a steep 62% from March.
Even the updated Model Y failed to do its job, with sales falling 24% to fewer than 20,000 units. Tesla’s share of China’s electric-only segment has plummeted from 11.5% in March to just 5.1%.
While Western debates around Tesla often circle back to Elon Musk’s public persona, China presents a different challenge: relentless domestic competition.
Chinese rivals are moving faster, innovating quicker, and offering more for less. With features like ultra-fast 800-V charging and increasingly polished tech offerings, they are capturing the loyalty of younger consumers. Many of these see no need to look beyond homegrown brands.
