Experts say rapid growth will continue as consumer confidence recovers

China's new energy vehicle sector, which saw explosive growth last year, is expected to hit a new high in 2023 as consumer confidence is restored and vehicle makers vie to launch new models, experts said.

Paul Gong, an automotive analyst at UBS, estimated that passenger NEV sales would reach 8.8 million units in 2023, accounting for 38 percent of total passenger vehicle sales.

A total of 6.5 million electric and plug-in hybrid passenger vehicles were sold last year, up 96.3 percent year-on-year, according to statistics from the China Passenger Car Association. The association expects sales to hit 8.5 million units this year.

The surging popularity of NEVs saw China's BYD overtake FAW-Volkswagen as the best-selling carmaker in 2022, with 1.86 million vehicles sold during the year, up 149 percent year-on-year.

The number of registered new energy vehicles in China hit 13.1 million by the end of 2022, an increase of over 67 percent year-on-year, according to statistics from the Ministry of Public Security.

Gong said the Chinese market is driven by customer demands instead of subsidies, and that more people will be attracted to NEVs as they see more such vehicles on the road, as a result of the so-called "demonstration effect".

Chen Shihua, deputy secretary-general of the China Association of Automobile Manufacturers, said NEV sales may fall during the first two months of this year compared with the same period last year because of the withdrawal of subsidies that were first introduced into 2009.

But for the entire year, sales will maintain rapid growth, said Chen, as both the macro economy and consumer confidence continues to recover.

Major carmakers share their optimism for the prospects of NEVs. Great Wall Motors, China's largest SUV maker, said it will launch 10 NEV models this year.

The models are expected to boost the company's sales to 1.6 million units this year, up from 1.06 million units sold last year.

Zeekr, the premium electric marque of Geely, will start to produce its second model this year. Its sales target for 2023 is to double 2022 sales and exceed 140,000 units.

Hongqi, the premium arm of China FAW Group, announced its NEV strategy earlier this month. It expects around 50 percent of its total sales in 2025 to be new energy vehicles.

At the event held earlier this month, Hongqi also unveiled an architecture called FMEs and three electric models built based on it.

Xu Liuping, chairman of China FAW Group, said NEVs will account for the majority of its estimated sales of 1.5 million units by 2030.

He said Hongqi will launch 15 NEVs in three years, covering all segments. He added that the brand has stopped investment in conventional internal combustion engine technology.

International premium carmakers are also stepping up their EV product campaigns.

BMW sold 41,900 electric vehicles last year in China, up 91.3 percent year-on-year. The German marque said it will have 11 electric models in the market this year, including the China-made iX1 and the electric Spectre from its luxury marque Rolls-Royce.

The arrival of the new electric models will see BMW offer the most diverse EV lineup of any premium brand, covering almost every segment.

Mercedes-Benz said it will launch six electric and plug-in hybrid models this year in China, including the EQE SUV and the EQS SUV.

Zhang Yongwei, vice-president of China EV 100, a major think tank in the industry, said at least 100 EV models will hit the Chinese market in 2023.

"It takes only a year or a year and a half to develop a brand new EV.For gasoline models, it takes around three years," said Zhang, speaking of the competition between EVs and gasoline vehicles.

Zhang estimated that NEV sales will grow at 30 to 40 percent year-on-year in 2023.

Gong at UBS said China's NEV exports will also rise in 2023. Last year, carmakers in China shipped 3.11 million vehicles overseas, up 54 percent from 2021, of which 679,000 units were NEVs.

Narong Sritalayon, a sales executive of Great Wall Motors Thailand, said the carmaker is planning to launch four NEV models in the country in 2023.

Chinese NEV carmakers are wowing overseas customers with models that "surpass their wildest dreams", which may see them raise their positions on the global stage, according to a McKinsey report released last month.