The dominant Chinese EV market is slowing

After strong electric vehicle sales in 2022, the Chinese car market is facing a setback in growth in 2023.

Last year, 23.5 million new passenger cars were sold in China, a 10% increase from 2021, according to data from CEIC and the China Association of Automobile Manufacturers (CAAM). Electric vehicles (battery electric [BEV] and plug-in hybrid electric [PHEV]) represented a share of around 26%, in units almost double the 2021 number. This strongly contributed to the general car sales growth figures, especially in the final four months of last year. Fully electric cars (BEV) sales represented almost three-quarters of total Chinese EV sales.

On a global scale, we expect new car sales to grow just over 4% in 2023. We believe the Chinese market will slightly surpass this figure with full-year sales growth of around 5%, despite the slow start to the year. The lifting of China’s zero-Covid restrictions should provide a boost to car sales, as will the economic rebound.