China’s NEV market to drive auto industry growth in 2023, says Fitch Ratings

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New-energy vehicles

21st May 2023 – (Beijing) New-energy vehicles (NEVs) are set to continue driving China’s auto market growth in 2023, according to a recent report by Fitch Ratings. The annual growth rate of the NEV market in China is expected to surpass 30 percent this year, an increase that could prompt global automakers to accelerate their electrification process and adjust their strategies in China, says Yang Jing, director of Asia-Pacific corporate research at Fitch Ratings.

The report highlights that measures taken by China to promote NEVs in rural areas, along with cheaper battery materials, may help small and mini electric vehicles regain growth. Jing believes that the growth of the NEV market will continue to be driven by the development of cheaper and more efficient batteries, as well as government policies promoting NEV adoption.

Earlier this month, China released a guideline to support people living in rural areas to purchase and use NEVs, with a focus on boosting the construction of charging infrastructure. The guideline is aimed at addressing the challenges faced by rural residents, including a lack of charging infrastructure and high vehicle costs.

The Chinese government has been actively promoting NEVs as a way to address the country’s air pollution and reduce carbon emissions. The country has set a target of having NEVs account for 20% of all new vehicle sales by 2025, and has implemented various policies to encourage NEV production and adoption, such as subsidies and purchase incentives.

Industry data shows that China’s NEV development has been on a fast track, with theoutput and sales of NEVs surging by 42.8 percent year on year in the first four months of 2021. During this time, over 2.29 million NEVs were produced, and 2.22 million were sold. This growth can be attributed to several factors, including government policies and incentives, technological advancements, and increased consumer awareness and demand.