According to Researcher and Research LLC, the electric vehicle (EV) market in China reached 3,231,362 units in 2021, with an annual growth rate of 143.2%. In terms of the sales proportion of battery electric vehicle (BEV) and plug-in hybrid electric vehicle (PHEV), the figures for 2021 were 82.6% and 17.4%, respectively, and were not much different from 82.1% and 17.9% in 2020.
Figure 1 Monthly EV sales in China in 2021
The Chinese EV market is traditionally slow in February due to the Lunar New Year holiday, while the last month of each quarter is the peak of the season, and the fourth quarter is the peak sales season, as shown in Figure 1. With strong policy support, China’s EV market showed a steady growth trend in 2021.
In terms of penetration, China’s EV penetration reached 15.1% in 2021, a significant increase from 5.7% in 2020. Among them, the penetration rates of mini and small EV segments were the highest. Therefore, the Chinese government has also responded by introducing a new policy to vigorously promote mini/small EVs to be part of rural microgrids this year.
Figure 2 Sales of the top 20 best-selling models in China in 2021
In terms of best-selling models, the top 20 accounted for 55.7% of the market, as shown in figure 2. Compared with 59.8% in 2020, it decreased by 4.1%, mainly due to a more pronounced concentration of the market in the top 15 models in 2021.
If the total market share of the top 25 models is used for comparison, the market share in 2021 increased compared with that in 2020, as the gap between the 21st and 25th models and the 16th and 20th models in 2021 was narrowed and higher than the market share of 2020. Therefore, in 2021, not only did the market share of the top 15 models in China’s EV market increase, but more than 60% of the sales were concentrated on the top 25 models.
It should be noted that, except for Tesla Model Y and Model 3, the rest of the other top 20 models all belonged to Chinese EV OEMs, and the trend of Chinese EV OEMs dominating the sales was more obvious than in 2020. For example, in addition to Tesla Model 3, BMW 530Le and VW Passat were also included in the top 20 models for non-Chinese EV OEMs in 2020, with these three models accounting for a total of 25.6% of the top 20 models, but in 2021, only Tesla remained in the list, with a significant drop in share to 17.8%.
This shows that the sales power of non-Chinese EV OEMs in China declined significantly while Chinese EV OEMs gained a larger market share in 2021. However, not all Chinese EV OEMs equally shared the benefits; for example, BYD, XPeng, and Hozon grew, while Weltmeister declined.
The Chinese government has cut subsidies for EV passenger cars by 30% since January 2022. Following the price hikes of Tesla Model 3/Model Y and Leap Motor T03 at the end of 2021, more EV models are now following suit in response to changes in China’s subsidy policies. For example, BYD Han, GAC Aion S, Hozon Nezha V/U, Polestar 2, and Geely Zeekr had already increased their prices in the first week of January, while Xpeng P7/P5/G3 joined the ranks in the second week. In addition, VW ID.4/ID.6 Crozz and Chery eQ have confirmed a price hike in February, while NIO EC6/ES6/ES8 is scheduled to raise prices in March. The current price increases for most of the other models are in line with this year’s subsidy reductions.
Although Chinese EV OEMs face fewer battery supply chain problems than non-Chinese OEMs, there is still pressure to increase their EV prices, such as Leap Motor T03, and Geely Zeekr, and Tesla Model 3/Model Y produced in China, which have not only reflected the reduction in subsidies but begun to reflect rising raw material costs. As the supply chain continues to be tight, more EV OEMs will be likely to increase the prices of their models due to rising costs.
Under this premise, China’s EV market will gradually change to be demand-led rather than supply-led. Our forecast for the Chinese EV market in 2022 is 5.8 million units, with a 79.5% annual growth rate. In 2023, when subsidies return to zero, we believe that there should be many local incentives, so the market demand will not necessarily stagnate in 2023, but China’s EV industry is beginning to enter the adjustment period of survival of the fittest.
Researcher and Research here defines EV as battery electric vehicle (BEV) and plug-in hybrid electric vehicle (PHEV), with passenger car as the primary purpose.