More than 56 percent of new vehicles sold in China's first-tier cities are electric ones, says report

New energy vehicles are reshaping the auto industry, bringing about changes from online purchases and loans to the supply chain, a recent report on China's automotive market said.

"The rise of electric car startups and the growing acceptance of NEVs have brought about sweeping changes to the sector," said Wu Xiaoping, an automotive business representative at United States-based data, information and marketing group Nielsen.

The annual report was released on Thursday by Nielsen and the auto research institute at the 21st Century Business Herald newspaper.

A survey by the two of 1,196 electric vehicle and plug-in hybrid buyers this year showed 54.5 percent placed their orders online, up significantly from 35 percent in 2021. In contrast, 76.8 percent of 1,212 gasoline car owners made their purchases in brick-and-mortar stores this year.

NEVs have seen rising acceptance among car owners. The survey showed that 82.6 percent of current electric car owners said they would choose electric models again, because of their driving experience and digital features.

Of current gasoline car owners, 52.4 percent said they would replace their vehicles with electric ones, adding they represent the future trends of the car industry.

The NEV segment in China has seen rapid growth despite semiconductor shortages. Sales of electric and plug-in hybrid passenger vehicles totaled 4.43 million units in the first 10 months of this year, up 107.5 percent year-on-year, data from the China Passenger Car Association showed.

They accounted for 26.5 percent of total passenger sales in the same period. In October, the figure hit over 30 percent.

Cui Dongshu, secretary-general of the CPCA, said NEV sales are expected to grow even higher in December as the subsidies on such vehicles are scheduled to stop, which would bring total sales this year to more than 5.9 million units.

The Nielsen report showed that more than 56 percent of new cars sold in China's first-tier cities this year were EVs. Even in the second-tier cities, they made up 42 percent of new cars sold.

Lu Zhenyu, vice-president of the auto finance center at Ping An Bank, said the bank offered loans worth 14.6 billion yuan ($2.09 billion) to NEV buyers from January to October this year, up 33 percent year-on-year.

He expects the figure to grow in the coming years, as more car owners switch to EVs.

Wang Jinwei, an executive at Sino-Japanese joint venture FAW Toyota, said more financial products can be offered to EV owners than gasoline buyers, as the EVs involve power batteries that are absent in conventional internal combustion engine vehicles.

Besides the bright prospects of the Chinese market, Cui at the CPCA estimated that NEV exports from China will reach 600,000 units this year. Chinese carmakers are gaining in popularity in overseas markets, ranging from Southeast Asia to Europe.

In late November, Chinese manufacturer Aiways won an order for up to 150,000 EVs from Thai e-mobility service provider Phoenix EV to be delivered over the next five years. The deal marked the largest EV order from Chinese carmakers worldwide.

Great Wall Motors is stepping up its globalization campaign, with NEVs as their heavyweight products.

Narong Sritalayon, a sales executive of Great Wall Motors Thailand, said the carmaker is planning to launch four NEVs in the country in 2023. There are already five NEVs from the Chinese carmaker in the Thai market, with their combined sales reaching 13,000 units so far.

Xu Haidong, vice-chief engineer of the China Association of Automobile Manufacturers, said the improved competitiveness of Chinese vehicles, especially NEVs, lies in their bold design, cutting-edge innovation, production quality and services.

The rise of the NEV industry is prompting companies in the industry to develop new products.

State-owned carmaker Dongfeng said on Thursday that it is scheduled to produce long-range solid-state batteries in the first half of 2024.

EVs featuring such batteries will have a range of up to 1,000 kilometers on one charge, said the carmaker.

The need for components related with driving-assist functions is rising as well, as EVs tend to have such smart features.

Statistics from research institute Gaogong show that more than 74,200 lidar sensors, the most expensive sensors used in vehicles, were installed in the first 10 months of the year, up from less than 10,000 in the same period last year.

They are mostly from Chinese companies Livox and Hesai as well as Silicon Valley-based Innovusion. Gaogong expects the figure to reach 400,000 to 500,000 units in 2023 in China.

German auto parts supplier ZF announced in August an investment of 320 million yuan to expand a plant in Shanghai to produce electric steering systems, which the company said can support autonomous driving functions at different levels.