Are you still buying gasoline cars in 2024?

In July this year, the number of consumers purchasing new energy vehicles surpassed that of gasoline vehicles for the first time. Suddenly, buying a gasoline car has become the minority choice.

This turning point came earlier than predicted by many institutions, marking a historic milestone in China's automotive market.

According to data from the China Association of Automobile Manufacturers, domestic sales of passenger vehicles reached 1.595 million in July. Among them, sales of new energy passenger vehicles increased to 853,000, while sales of traditional fuel passenger vehicles were 742,000, a decrease of 383,000 units from the same period last year.

Meanwhile, China's share of new energy passenger vehicles in the global market continues to increase. According to the China Passenger Car Association, China's share of new energy passenger vehicles globally exceeded 63% in 2022, reached 64% in 2023, and reached 67% in the second quarter of this year.

However, it may be too early to conclude that gasoline cars are on the decline. Looking at a longer timeline, from January to July this year, sales of new energy vehicles reached 5.934 million, accounting for 36.4% of total new car sales, with gasoline cars still dominating the market.

Continued Policy Support

In July 2024, the monthly penetration rate of new energy vehicles surpassed 50% for the first time, reaching 51.1%.

Such an achievement was unimaginable in the early days of new energy vehicle development. At the recently held 4th Shenyang Intelligent and Connected Vehicles Conference, Su Bo, Deputy Director of the Economic Committee of the 13th National Committee of the CPPCC and former Deputy Secretary and Deputy Minister of the Ministry of Industry and Information Technology, recalled, "When we formulated the 2012-2020 plan, we set a target of achieving a production capacity of 2 million new energy vehicles and cumulative sales of 5 million by 2020. However, there were still dissenting voices at that time, saying that our goal was too ambitious and aggressive."

Su Bo, Deputy Director of the Economic Committee of the 13th National Committee of the CPPCC and former Deputy Secretary and Deputy Minister of the Ministry of Industry and Information Technology

Su Bo explained that at that time, China's production of new energy vehicles was only 12,800 units, and we were not advanced in the development of new energy vehicles. "However, the State Council's 2012 plan and the 30 policies related to the development of the entire new energy vehicle industry chain in 2014 have driven the ultra-rapid development of China's new energy vehicles. China's new energy vehicle sales reached 1.36 million in 2020, 3.54 million in 2021, 7.05 million in 2022, and 9.58 million in 2023. We have formed a new industrial ecosystem with advanced technology, a complete industrial chain, and strong international competitiveness," said Su Bo.

The favorable policies at the policy level continue to be released to this day.

On August 16, the Ministry of Commerce and six other departments officially released the "Notice on Further Improving the Work of Automobile Trade-in and Upgrade," officially launching a new round of automobile trade-in and upgrade programs. The trade-in policy has increased the standards for scrapping and replacement subsidies. For eligible vehicle scrappings and replacements, the subsidy standards have been doubled, from 10,000 yuan for purchasing new energy passenger vehicles and 7,000 yuan for purchasing gasoline passenger vehicles to 20,000 yuan and 15,000 yuan, respectively.

Since March this year, the state has carried out automobile trade-in activities, with policies gradually taking effect, providing impetus for the growth of automobile consumption.

According to data from the Ministry of Commerce, as of 10:00 on August 16, 2024, over 600,000 applications for automobile scrapping and replacement subsidies have been received, with over 10,000 new applications per day. From January to July this year, the national automobile recovery volume was 3.509 million, an increase of 37.4% year-on-year. After the implementation of the automobile scrapping and replacement subsidy policy, the automobile scrapping volume surged. In July, the national automobile recovery volume was 731,000, an increase of 93.7% year-on-year. As the effect of the automobile trade-in policy gradually emerges, it also drives the growth of automobile sales, particularly notable in the increase in new energy vehicle sales.

Furthermore, the State Council recently issued the "Opinions on Accelerating Comprehensive Green Transformation of Economic and Social Development," which states that low-carbon transportation means should be promoted, and by 2035, new energy vehicles should become the mainstream of newly sold vehicles.

Multiple Factors Stimulating Growth

In the highly competitive new energy vehicle market, consumers have richer and better options. Nowadays, new products launched by automakers are generally concentrated in the field of new energy vehicles. Data shows that in the first half of this year, a total of 11 gasoline vehicles were launched in the automotive market, 31 fewer than in the same period in 2018, while 60 new models of new energy vehicles were launched, almost six times that of gasoline vehicles.

Among them, the growth of plug-in hybrid models is noteworthy. In July, sales of plug-in hybrid models increased by 80.7% year-on-year, significantly higher than that of pure electric models, becoming the main factor driving the growth of new energy vehicle sales.

The strong growth momentum in the Chinese market has also boosted the performance of the global new energy vehicle market, offsetting the impact of declining demand in Europe. Market research firm Rho Motion released a report stating that global sales of all-electric and plug-in hybrid vehicles increased by 21% year-on-year in July.

Compared to pure electric vehicles, plug-in hybrid vehicles are favored by consumers due to their high flexibility and long driving range, making them an important choice for many automakers to align with market trends. Taking BYD as an example, BYD officially announced that it sold 340,000 passenger vehicles in July, an increase of 30.5% year-on-year, with 130,000 pure electric models and 210,000 plug-in hybrid models.

In terms of usage, the user experience of new energy vehicles continues to improve. With advancements in battery, motor, intelligent connectivity, and artificial intelligence technologies, the driving experience of new energy vehicles has become highly attractive to consumers, especially younger ones.

Meanwhile, the convenience of electric vehicle charging is also improving. As of the end of June this year, the total number of charging piles nationwide reached 10.244 million, an increase of 54% year-on-year, ensuring the charging needs of 24 million new energy vehicles and bringing more convenience to pure electric travel.

It is worth noting that the development of new energy vehicles is synchronized with the rise of domestic brands. In July's domestic retail sales, the penetration rate of new energy vehicles among domestic brands reached 73.9%; among luxury vehicles, it was 27%; while among mainstream joint venture brands, it was only 8.3%.

At the 4th Shenyang Intelligent and Connected Vehicles Conference, Zhang Jing'an, Chairman of the China Science and Technology System Reform Research Association and Academician of the International Eurasian Academy of Sciences, said when discussing the current development of smart electric vehicles in China, "Marketization has allowed many high-tech companies that are not traditionally involved in the automotive industry to enter this sector, truly forming a cross-disciplinary and cross-departmental integration, thereby enabling China's automotive industry to achieve better development."

Are gasoline cars 'over'?

Gasoline cars and new energy vehicles are exhibiting a trend of mutually exclusive growth, which is consistent with the current sales performance of joint venture brands and domestic brands.

In the retail sales ranking of domestic automakers in July released by the China Passenger Car Association, domestic and joint venture brands showed a polarization trend, with BYD Auto, Chery Automobile, and Lixiang Auto all achieving significant growth. Among them, Chery's sales increased by 51.0% year-on-year, the largest increase among the top ten automakers, while Lixiang Auto's sales increased by 49.4%, entering the top ten domestic automakers for the first time. On the other hand, sales of joint venture brands declined. Sales of joint venture manufacturers such as FAW-Volkswagen, SAIC Volkswagen, GAC Toyota, and Dongfeng Honda all declined significantly.

The monthly sales of new energy vehicles surpassing those of gasoline vehicles for the first time has once again sparked discussions about the impending decline of gasoline cars. However, insiders believe that China's automotive market will continue to exhibit a trend of co-development between gasoline cars and new energy vehicles in the future.

"From January to July this year, the cumulative market share of pure electric vehicles was 24%. Excluding small cars, the pure electric vehicle market is actually declining, and the pure electric vehicle segment is not as optimistic as we thought. The remaining 76%, whether it's extended-range, hybrid, or pure gasoline, all have engines. Gasoline cars or vehicles powered by gasoline can still have a long development cycle," said Gao Fei, Executive Deputy General Manager of Chery's Brand Marketing Center. Due to different application scenarios and markets, gasoline cars and new energy electric vehicles are not in conflict, and Chery will adhere to a dual-track approach of gasoline and electric vehicles.

The latest statistics released by the Ministry of Public Security on July 8 show that as of the end of June 2024, the number of motor vehicles in China reached 440 million, including 345 million automobiles and 24.72 million new energy vehicles. Gasoline cars still account for the majority of motor vehicle ownership.

Meanwhile, gasoline cars, with their mature technology, lower maintenance costs, extensive infrastructure, and lower depreciation rates, remain the choice for many consumers. The competitive landscape of the automotive market is becoming increasingly diversified with multiple segments and brands.