The Chinese Electric Car Market: What to Expect in 2025
The electric car market in China is set for a significant slowdown in 2025, putting pressure on companies navigating the changing landscape. Sales of new energy vehicles, including battery-powered and hybrid cars, saw a 42% increase last year, reaching nearly 11 million units, according to the China Passenger Car Association. Leading the market, BYD’s NEV sales surged by over 40% to almost 4.3 million units, exceeding its growth target.
Looking ahead, HSBC analysts predict a modest 20% growth in China’s new energy vehicle sales this year, with increased industry consolidation. They anticipate BYD’s sales to grow by around 14%. Despite strong sales, only BYD, Tesla, and Li Auto were profitable in 2023.
According to Yuqian Ding, head of China autos research at HSBC, the current situation is unsustainable, and industry consolidation is expected to accelerate. The combination of subsidies and consumer incentives has fueled the rapid growth of new energy vehicles in China in recent years.
Appotronics, a Shenzhen-based laser display company, ventured into the auto industry with an in-car projector screen, shipping over 170,000 units last year. However, the company foresees stagnant volumes in 2025, citing financial challenges for automakers and overcapacity issues in the market.
As automakers engage in a price war to attract customers, profit margins are being squeezed, particularly as electric vehicles gain momentum. With NEV penetration exceeding 50% of new car sales, growth rates are expected to slow to 15-20% in 2025. Competition is shifting towards smart features, with in-car entertainment and driver-assist technology becoming key selling points.
Appotronics plans to introduce a 4K-resolution projector and enhanced screen features for cars in China this year, with future developments focusing on laser-based uses for car headlights. Talks are underway with Tesla for a projector-type product in their next-generation vehicle.
In summary, the future of the Chinese electric car market is marked by slower growth, increased competition in smart features, and evolving consumer demands for innovative technology in vehicles.