During the recently concluded Paris 2024 Olympic Summer Games, a NIO electric vehicle (EV) parked in front of the Louvre became an unexpected sensation among netizens and locals alike. The Chinese character on the distinctive green license plate suggested that the fully electric car had journeyed all the way from Nanjing, the capital of east China's Jiangsu Province, capturing the imagination of many who were intrigued by its long voyage.

The car's owner, Zhou Jun, had indeed embarked on an ambitious journey that had begun in Nanjing. Over the course of 30 days, Zhou drove 14,000 km across 10 countries, ultimately arriving in Paris two days before the Olympics kicked off. His journey culminated in attending the eagerly anticipated matches of the Chinese women's volleyball team and the Chinese table tennis team.

Zhou's adventure did not stop in Paris. He planned to continue his journey, driving to Sweden to participate in a cross-country race and then heading to Iceland for a mountaineering expedition.

The long drive demonstrates to consumers, who once worried about traveling across provinces in EVs, that they can now undertake international and even intercontinental journeys. Stories like Zhou's highlight the evolving landscape of the automotive industry.

On August 8, the China Passenger Car Association (CPCA) released its monthly data, showing that in July, the national retail sales of passenger cars reached 1.72 million units. Of these, conventional fuel vehicles accounted for 840,000 units, a 26-percent decrease year on year, while new energy vehicles sold 878,000 units, representing a 36.9-percent increase and a market penetration rate of 51.1 percent. For the first time, the monthly retail sales of new energy passenger cars in China surpassed those of traditional fuel vehicles, marking a historic moment for the Chinese automotive industry.

In China, EVs are officially called new energy vehicles, which designate automobiles that are fully or predominantly powered by electric energy, including plug-in EVs, battery EVs, plug-in hybrid EVs and fuel cell EVs.

"With the penetration rate surpassing 50 percent for the first time, it's clear that new energy vehicles are gaining increasing recognition from consumers," Cui Shudong, Secretary General of the CPCA, told China Central Television, adding that the cost-effectiveness of these vehicles has reached a level that appeals to mainstream consumers. It is inevitable that new energy vehicles will become the mainstream choice for consumers in the future, he said.

Increasing popularity 

From 2005 to 2015, it took China 10 years for the penetration rate of EVs to surpass just 1 percent. Between 2016 and 2019, although the penetration rate increased to 5 percent, fuel-powered vehicles still dominated the market. The year 2020 marked a turning point when China set a goal for EVs to reach a penetration rate of over 50 percent by 2035. Following this, the penetration rate of EVs in China saw explosive growth, surpassing 14 percent in 2021, 27 percent in 2022, and 33 percent in 2023.

In July 2023, the cumulative production of EVs in China reached 20 million units. It took 15 years to produce the first 10 million vehicles, but the second 10 million were produced in just 17 months. In the first half of 2024, China saw its 30 millionth EV roll off the production line.

Behind these figures lies the combined influence of many factors, including market dynamics, technological advancements and a supportive environment.

"The increasing strength of China's manufacturing sector has empowered the industry with significant advantages across the supply chain. These include the robust capabilities in equipment manufacturing and the production of key components like batteries, motors and chips, where China holds a substantial competitive edge," Zhang Xiaorong, Director of the Beijing-based Deep Technology Research Institute, told Beijing Review.

"As technology advances and costs decrease, the performance and range of EVs have greatly improved, making them more appealing to consumers," Zhang Xinyuan, head of research at Co-Found, a Beijing-based think tank, told Beijing Review. "Additionally, smart features and connectivity in EVs offer greater convenience and enhanced user experience, which are key factors in attracting consumers."

While many traditional fuel-powered vehicles still rely on mechanical instruments and conventional systems, sometimes even requiring optional upgrades for features like adaptive cruise control, domestic EV makers have advanced rapidly. Features that were once only seen in fuel-powered cars priced over 500,000 yuan ($70,000), such as air suspension, are now available in EVs priced at around 200,000 yuan ($28,000).

In addition, EVs offer better driving economy compared to traditional fuel-powered cars. For a gasoline car, assuming a fuel consumption rate of 7 liters per 100 km and using 92 octane gasoline priced at 8.5 yuan ($1.2) per liter, the fuel cost for commuting 20,000 km a year is approximately 11,900 yuan ($1,662).

In contrast, EVs typically consume between 11 to 14 kilowatt hours (kwh) per 100 km. If only use the higher estimate of 14 kwh and consider that public charging stations charge around 1.5 yuan ($0.21) per kwh, the annual electricity cost for commuting 20,000 km would be about 4,200 yuan ($588). Using a home charging pole would further reduce this cost by two thirds compared to public charging stations.

Incentives such as launching a nationwide campaign to bolster the EV uptake in China's rural areas and EV tax reduction and exemption policy are also key factors influencing consumers' decisions to choose EVs.

From the consumer perspective, purchasing a fuel-powered car priced at around 180,000 yuan ($25,200) incurs a purchase tax of over 16,000 yuan ($2,240), bringing the total cost to approximately 200,000 yuan ($28,000). In contrast, the same 180,000-yuan EV is exempt from this tax, resulting in nearly a 10-percent saving on the purchase price.

As car ownership continues to rise in first- and second-tier cities in China, urban traffic pressure is increasing, leading to stricter regulations on the issuance of fuel vehicle license plates by traffic management authorities. Many large and medium-sized cities have established traffic restriction policies, stipulating vehicles cannot be driven on the road on certain days of the week. EVs are generally exempt from these restrictions, offering greater convenience for daily use.

According to the National Energy Administration, as of late June, the total number of charging stations in China reached 10.24 million, an increase of 54 percent year on year, meeting the charging needs of 24 million EVs.

Growing global acceptance 

Currently, Chinese EVs are performing well not only in the domestic market but are also rapidly gaining popularity overseas.

For example, in the Thai market, Chinese-branded EVs hold an impressive 80-percent market share. Chinese car companies' "going abroad" strategy is gradually shifting from simple product exports to a full industry chain approach. This includes the export of complete vehicles, technology and brand assets, as well as establishing manufacturing plants overseas.

"As global attention to environmental and energy issues continues to rise, it creates a broad market space for the export of EVs. The Chinese EV industry already possesses technological and production advantages, providing strong support for exports. In the future, as EV technology continues to advance and international markets expand, the prospects for Chinese EVs abroad will become even more promising," Zhang Xinyuan said.

"The rapid development of the passenger car industry has facilitated the entry of Internet companies, smart consumer manufacturing enterprises and international EV makers, which has invigorated industry competition and enhanced innovation capabilities," Zhang Xiaorong said.

(Print Edition: Shifting Gears) 

Copyedited by G.P. Wilson 

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