In China, plug-in hybrid and electric vehicles are outselling petrol cars

For the first time in history, battery electric vehicles (BEV) and plug-in hybrids (PHEV) have reached an unprecedented milestone in China, the world’s largest car market. In July 2024, these vehicles accounted for more than half of all car sales in the country, reaching a record 50.7%. This achievement marks a fundamental shift in the global automotive industry, underlining China’s rapid transition towards more sustainable mobility.

According to recent data, sales of new energy vehicles, a category that includes both BEVs and PHEVs, rose by 37% compared with the previous year. This growth is not only impressive in absolute terms, but also represents a 28.6% increase over the previous month, June 2024.

Just three years ago, battery electric vehicles accounted for only 7% of total car sales in China. Now, at 50.7%, it is clear that the adoption of these vehicles has moved from an emerging trend to becoming the new standard for many Chinese consumers.

Government support

One of the key factors behind this accelerated growth has been the determined support of the Chinese government. At the end of July, the authorities doubled the cash incentives for purchasing battery electric vehicles, raising them to 20,000 yuan (approximately $2,785). Most interestingly, these incentives were applied retroactively from April, when they were first announced, which has further encouraged consumers to opt for greener options.

In addition, NEVs are exempt from sales tax of up to 30,000 yuan (about $4,175) for 2024 and 2025. This, combined with a scrappage scheme offering 20,000 yuan ($2,540) to owners who replace their old petrol vehicles with a BEV or PHEV, has significantly boosted sales of these models.

Transformation of the Chinese market

By contrast, sales of passenger cars in general (including petrol models) fell 3.1% in July 2024, reaching a total of 1.73 million units. This decline reflects a clear shift in consumer preferences, which now lean more towards sustainable mobility options.

Furthermore, some Chinese cities are easing their strict restrictions on car purchases. A notable example is Beijing, which in July increased its licence quota for electric vehicles by 20,000 units. This is the first time the capital has raised this quota since it introduced its restriction policies in 2011 to combat air pollution and traffic congestion.