According to a report from Moody’s Investors Service, new-energy vehicles (NEVs) are projected to constitute 50% of China’s car sales by 2030. This advancement marks a pivotal shift towards environmentally friendly transportation, driven by government incentives and an expanding charging infrastructure.
The surge in NEV adoption, from a mere 1.3% in 2015 to 31.6% in 2023, has already surpassed Beijing’s 2025 target of 20%. The growth is fueled by subsidies for buyers, tax breaks for manufacturers, and robust development in charging facilities. Despite the optimistic outlook, Moody’s forecast is more conservative than UBS Group’s 2021 prediction, which estimated 60% of new vehicles sold would be battery-powered by 2030.
The automobile industry, including leading manufacturers like BYD, Li Auto, and Tesla, is expected to contribute significantly to China’s economy, accounting for 4.5 to 5% of the nominal GDP by 2030. This contribution is seen as a counterbalance to weaknesses in other sectors, notably real estate.
However, Moody’s highlighted potential geopolitical challenges, particularly in international trade, which could impact the development of China’s NEV value chain. Notably, the European Commission’s investigation into state subsidies for Chinese-made electric vehicles could pose a threat, potentially resulting in tariffs exceeding the EU’s standard rate of 10%.
New Energy Vehicles, encompassing Battery Electric Vehicles, Plug-in Hybrid Electric Vehicles, and Fuel Cell Electric Vehicles, are recognized for their reduced environmental impact. These vehicles, which emit fewer or no tailpipe emissions, are pivotal in the global effort to mitigate air pollution and climate change.
The shift towards NEVs is seen as a crucial step in China’s transition to sustainable transportation, despite facing international scrutiny and trade barriers that may affect its progression in the global market.
