New electric vehicles destined for Belgium at a port in the city of Taicang in China’s eastern Jiangsu province on January 11, 2025.
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BEIJING – China’s electric car market is headed for a sharp slowdown by 2025, according to analyst forecasts, increasing pressure on companies trying to survive.
According to the China Passenger Car Association, sales of new energy vehicles, a category that includes only battery-only and hybrid cars, rose 42% last year to nearly 11 million units. Market leader BYDNEV sales soared – by more than 40% last year to almost 4.3 million units, well above the internal target of at least 20% growth from 2023.
But looking ahead, HSBC analysts predict just a 20% increase in Chinese new energy vehicle sales this year, alongside increased consolidation in the sector. They forecast BYD unit sales growth of around 14%.
Strong sales volumes have allowed “strugglers and laggards” to hold on despite falling margins, Yuqian Ding, head of China Autos Research at HSBC, said in a report last week. She only indicated that BYD, Tesla And Li Auto turned a profit in 2023.
“In our view, this situation is unsustainable and we expect the pace of industry consolidation to accelerate rapidly,” Ding said.

China’s mix of subsidies and consumer purchasing incentives has supported the rapid growth of new energy vehicles in recent years.
Shenzhen-based laser display company Appotronics didn’t even have a car business until it started making an in-car projector screen, which arrived in China early last year. The company shipped more than 170,000 units last year.
But in a sign of a changing market, the company doesn’t expect comparable volumes until 2025, Appotronics Chairman and CEO Li Yi told CNBC last week. He predicted that the market would not pick up again until 2026.
“Many customers, the car manufacturers, are not in good financial condition. They have cut back on the R&D budget. That will definitely have a negative impact on this sector,” Li said, also noting overcapacity issues .
As automakers entered China’s fast-growing electric car market, they started a price war in an effort to attract customers. Smartphone company Xiaomi launched its SU7 electric sedan last year for $4,000 less than Tesla’s Model 3, and with claims of longer driving range.
“When BYD and Tesla cut prices, most rivals have little choice but to follow suit. This has clearly put pressure on the overall profit pool in the auto industry, especially now that electric cars have all the momentum,” HSBC’s Ding said , noting that BYD has a large profit margin. net profit margin of just 5%, less than the low teens for top automakers when the traditional fossil fuel car was at its peak.
Association data showed that NEV penetration of new cars sold had exceeded 50% in the second half of the year.
Due to the high penetration rate, new NEV car sales growth is likely to slow to 15% to 20% in 2025, according to Fitch Bohua analyst Wenyu Zhou and a team. They expect that so-called smart features will increasingly become an important competitive point.
Automakers in China have increasingly turned to in-car entertainment features and driver assistance technology as ways to make their vehicles stand out.
As the electric car market moderates its growth, Appotronics plans to bring a 4K resolution projector to cars in China this year, along with a screen with better contrast and privacy features, Li said.
Looking longer term, the company plans to spend the next two to three years developing new laser-based applications for automotive headlights, Li said. He added that the company is in talks with Tesla for a projector-like product in a next-generation vehicle, but could not say more due to a non-disclosure agreement.