[SMM Analysis] China Leads Global NEV Sales Growth in 2024, But New Challenges Lie Ahead in 2025

Global: Global NEV Sales in 2024 Are Expected to Reach 17.15 Million Units, Up 20% YoY

From January to November 2024, global automobile sales reached 82.01 million units, with NEV sales at 16.07 million units. The NEV market share during this period reached 19.6%, with BEVs accounting for 12.6%, PHEVs for 7%, and HEVs for 6.4%, showing an increase in the share of HEVs. Global NEV sales in 2024 are expected to reach 17.15 million units, up 20% YoY.

The Chinese market in 2024 shows a trend of initial decline followed by recovery. In H1, the Chinese market was impacted by the continued phase-out of subsidies and the price-cutting pressure faced by automakers, leading to a cautious consumer attitude and weak market performance. However, starting in H2, with the intensification of subsidy policies, NEV sales showed strong growth, exceeding expectations. In contrast, the European market underperformed due to the cancellation or reduction of subsidies in several countries, coupled with the early stages of anti-subsidy measures and local industry chain development, resulting in a near stagnation of electrification and almost no sales growth. The US market also saw a slowdown in electrification. Affected by FEOC, some models lost subsidy eligibility in 2024, and supply constraints of affordable new models led to a performance below expectations.

China: Sales Are Expected to Exceed 12 Million Units, Up 36% YoY

China's NEV sales in 2024 are expected to reach 12.85 million units, with domestic sales accounting for approximately 89% and exports for about 11%. The penetration rate of NEVs in China is expected to reach 45%.

In 2024, China's PHEV sales are projected at 5.215 million units, and EV sales at 7.634 million units. The share of PHEVs is expected to rise significantly, from 29.5% in 2023 to 40.6% in 2024. The PHEV share is expected to continue increasing due to two main reasons: 1) Plug-in hybrid models have proven capable of achieving "price parity with fuel vehicles," eliminating the price disadvantage compared to fuel vehicles, creating a price advantage over BEVs, and expanding their technical advantages over fuel vehicles. 2) Mainstream consumers' concerns about the safety and driving range of BEVs remain unresolved, making PHEVs an excellent transitional option to alleviate anxiety.

In terms of the structure of China's NEV models in 2024, SUVs accounted for 47%, slightly less than sedans. Among sedans, small NEVs represented by A00, A0, and A-class models accounted for 28%, a decline compared to 2023. Meanwhile, B-class and C-class sedans accounted for 22%, showing a significant increase compared to 2023.

Domestic and Emerging Brands Shine: In 2024, supported by sustained policies and a significant rise in consumer demand, the domestic automotive market experienced unprecedented prosperity, with many automakers achieving historic sales breakthroughs. BYD continued to lead the market, with annual vehicle sales reaching 4.272 million units, setting a new sales record. Emerging automakers also reached new heights, with several achieving double sales growth. Li Auto secured the top spot with sales exceeding 500,000 units, followed by Harmony lntelligent Mobility Alliance with 445,000 units, and Leap Motor delivering nearly 300,000 units, ranking third. Xiaomi Auto, as a new entrant, also performed impressively, growing from 7,500 units in its first month of delivery to over 20,000 units within six months, surpassing its annual target of 130,000 units.

Europe: Sales Are Expected to Reach 2.81 Million Units, Down 4.7% YoY

Europe has long been the second-largest NEV market after China. However, in 2024, NEV sales in Europe are expected to decline YoY, primarily due to reduced subsidies or the cancellation of some subsidy policies in many European countries, directly affecting consumer willingness for car purchases. From the perspective of market structure, European automakers, constrained by concerns over profit margins, lack the ambition and capability to produce affordable entry-level EVs. Meanwhile, Chinese emerging automakers' low-end models face no competition in Europe. On July 4, 2024, the European Commission announced the imposition of provisional anti-subsidy tariffs on EVs imported from China. BYD, Geely, and SAIC will face tariffs of 17.4%, 20%, and 38.1%, respectively. Chinese producers that cooperated but were not sampled will face a weighted average tariff of 20.8%, while non-cooperative companies will face a tariff of 37.6%. The implementation of these tariffs significantly impacts the export strategies of many Chinese automakers, increasing the difficulty for Chinese EVs to enter Europe.

US: Sales Are Expected to Reach 1.62 Million Units, Up 11% YoY

In 2024, the US NEV market showed some growth, but the growth rate slowed, with NEV penetration rising to 12%. The Biden administration's Inflation Reduction Act reinstated a tax credit of up to $7,500 for EV purchases, supporting the US electrification transition. However, the FEOC in 2024 caused some models to lose subsidy eligibility, impacting the growth of the US NEV market.

SMM believes that 2024 was a year of both opportunities and challenges for the NEV market. On one hand, the implementation of various subsidy policies effectively stimulated consumer enthusiasm for car purchases and replacements, providing ample room for NEV development. On the other hand, intense market competition and increasingly diverse consumer demands posed higher requirements for automakers. Looking ahead to 2025, with the continued intensification of subsidy policies, domestic NEV sales are expected to maintain a growth trend. However, given the limited room for growth in the domestic market and the challenges of export difficulties due to overseas tariff hikes, competition in the NEV market will become even fiercer, presenting new challenges for automakers!