Data released by the China Association of Automobile Manufacturers (CAAM) showed that China's new energy vehicle sales fell 18.6% month-on-month in January after China cut subsidies for new energy vehicles by 30%.
"In December, total sales surged as buyers rushed to buy new energy vehicles ahead of the New Year subsidy cuts," said Cui Dongshu, secretary general of the China Passenger Vehicle Association (CPCA), another industry body.
In December, China's new energy vehicle sales were 518,000 units, up 159.5% year-on-year. In January, sales of new energy vehicles, including electric, plug-in hybrids, and hydrogen fuel cell vehicles, were 431,000 units, up 135.8% year-on-year.
China has been actively pursuing electric vehicles to curb vehicle emissions and promote high-tech industries, with sales of electric vehicles in China growing tenfold since 2014, compared with just four years after the United States last year. But strong growth has been dependent on China's generous subsidies, which allow electric vehicle startups to lower prices.
However, the subsidy-led growth model cannot be sustained in the long term, and the Chinese government has cut subsidies and encouraged local e-commerce companies to rely on innovation rather than government support as the industry becomes more mature.
According to the China Electronic Chamber of Commerce, the current share of new energy vehicles accounts for 13.88% of China's total automobile sales, and In 2021, China has sold 2.88 million new energy vehicles, of which electric vehicles account for 82% of the total sales of new energy vehicles.
China's State Council said new energy vehicles will account for 20 percent of China's total new car sales by 2025 and 20 percent of China's total new car sales by 2035, as part of an effort to curb air pollution, which has set ambitious targets.
U.S. electric car maker Tesla sold 59,845 Chinese-made cars in January, up 286.5 percent year-on-year, according to the China Passenger Car Association.
China's big three giants, Weilai, Li Che and Xiaopeng, also completed strong sales figures.
January sales increased 115% y/y to 12,922 units. Lee Motors, which sells extended-range electric vehicles, sold more than 10,000 vehicles for three consecutive months and sold 12,268 vehicles last month, up 128.1 percent year-on-year.
Tesla is the only foreign automaker among China's top ten best-selling new energy vehicle brands because it faces stiff competition in China. Local competitors such as NIO, Xiaopeng and Li Auto have better understood Chinese consumers' demand for electric vehicles, resulting in products that are better suited to local tastes.
NIO was the worst performer of the three Chinese electric vehicle makers, achieving an annual growth rate of only 33.6% in January, reaching 9,652 units.