Published on February 14th, 2024 | by Sounder Rajen

China’s NEV Sales Drop For The First Time Since Last August

Will ICE vehicles finally make a comeback and the age of EVs and NEVs slowdown?

Shocking news as China’s new energy vehicle (NEV) sales fell 38.8 percent versus the previous month, the first drop like this since August 2023, industry data showed, as demand faltered in the world’s largest auto market despite the still very rampant price wars there started by Tesla.

Vehicle sales and exports, totalled 2.44 million units, up 47.9 percent from a year earlier but down 22.7 percent from December, the first such decline since November, according to data from the China Association of Automobile Manufacturers (CAAM). NEV sales, making 29.9 percent of total sales, grew 78.8 percent on year in January.

Moreover, CAAM data also tracks automakers’ sales to dealers and includes commercial vehicles such as trucks unless specified. Last January, passenger vehicle sales in China plunged 37.9 percent on year and slumped 40.4 percent on month, the worst performances for January since the 2000s, according to the China Passenger Car Association (CPCA), as subsidies and tax cuts ended.

The shortened business days were the week-long Chinese New Year festivities in January last year so this also affected sales. China exported 443,000 vehicles in January 2024, accounting for 18.2 percent of the total sales, while nearly one out of seven NEVs sold during the month was also exported, CAAM data shows.

Exports have been a driving force for growth for automakers in China as demand at home weakens but its growing clout as a vehicle exporter is causing frictions abroad. China’s commerce ministry said on Wednesday it would encourage the NEV industry to “actively” respond to foreign trade restrictions and cooperate with overseas firms.

On top of that, in the face of slowing demand and rising competition, Tesla slashed prices on some Model 3 and Y cars in China in January and offered cash discounts for some Model Y units from 1 February 2024, reversing five upward adjustments since late October. Still, the demand just isn’t what it used to be.

Tesla’s biggest Chinese rival BYD also saw NEV sales at 201,493 in January, the lowest since March 2023. Its sales were up 33.14 percent from the year earlier but down 40.92 percent from December when BYD pushed inventories to dealers at the year-end to meet its annual sales target of 3 million units.

Geely, on the other hand, which has brands like Zeekr, Geely and Lynk & Co, sold a total of 213,487 vehicles. Among other EV brands, Huawei-backed Aito delivered 32,973 cars in January, up 636.83 percent from a year earlier and up 34.76 percent from the prior month, helped by sales of the new M7.