Report predicts a pivotal moment for EV dominance in 2025

EVs are expected to surpass internal combustion engine vehicle sales in China for the first time next year

Electric vehicle (EV) sales in China are poised to surpass traditional vehicle sales for the first time next year, marking a significant milestone in the global shift toward clean energy, according to a new report.

Projections from investment banks UBS, HSBC, and other research groups, shared with the Financial Times, forecast domestic EV sales to grow by 20% year-over-year, reaching over 12 million vehicles in 2025. This includes both pure EVs and plug-in hybrids. Meanwhile, internal combustion engine (ICE) vehicle sales are expected to decline by more than 10%, dropping below 11 million.

This marks a pivotal moment for the world’s largest car market, highlighting China’s rapid progress in the clean energy transition compared to Western nations. In Europe and the United States, high interest rates and inflation have tempered consumer interest in EVs.

China’s EV surge has been fueled by a combination of government subsidies and intense domestic competition, which has driven prices down. A government-led initiative offers consumers over $2,800 in subsidies when trading in ICE vehicles for EVs or hybrids, further accelerating adoption.

Domestic manufacturers, including BYD, backed by Warren Buffett, have implemented aggressive price-cutting strategies. In March, BYD reduced the price of its Seagull EV by 5%, bringing its cost to under $10,000. Other manufacturers like Nio have followed suit in the battle for market share. Tesla, facing stiff competition, has also cut prices in several countries, including China. Despite a 3.1% drop in revenue in the first half of 2024, Tesla reported record-breaking weekly sales in China in early December.

While Chinese EV makers have sought to replicate their success overseas, they face challenges due to rising Western tariffs. The EU recently announced plans to increase tariffs on Chinese EVs to 45% over five years, citing concerns over Beijing’s subsidies. Similarly, the U.S. raised tariffs to 100% earlier this year. It remains uncertain how these barriers will affect what is shaping up to be a landmark year for China’s EV industry.

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  • Growing up with a father who was a mechanic I had an appreciation for cars and motorcycles from an early age. I shared my first bike with my brother that had little more than a 40cc engine but it opened up a world of excitement for me, I was hooked. As I grew older I progressed onto bigger bikes and...

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