Car sales in China are projected to revive and align with growth rates of 2023, propelled by the ongoing surge in sales of New Energy Vehicles (NEVs).
China's New Energy Vehicle (NEV) Sales Surge in 2025
China's NEV sales have experienced a significant surge in 2025, marking a fifth consecutive month of growth in this sector. The total number of NEVs sold in the first seven months of the year reached 8.22 million units, a 38.5% increase compared to the same period in 2024.
The increased sales are driven by multiple factors, including strong market growth, cost advantages of electric technology, policy support, and evolving consumer preferences favoring battery electric vehicles (BEVs) over plug-in hybrids (PHEVs).
In July 2025, NEV sales reached 1.26 million units, a 27% year-on-year increase, although slightly below June 2025 levels. NEVs captured 48.7% market share in July, up from 43.8% in July 2024, showing that NEVs are growing faster than the total vehicle market.
BEVs continue to grow strongly, with July retail sales up 24.5% year-on-year at 607,000 units, while PHEVs saw declining demand. This reflects consumer and market preference strengthening for pure electric powertrains.
One of the key contributors to the growth in BEV sales is the lower cost of ownership, especially in heavy-duty trucks. Battery-electric heavy-duty vehicles (HDVs) are rapidly gaining market share, with almost 22% market share in the first half of 2025, compared to 8.6% in the same period of 2024. The lower cost of ownership for electric trucks—10-26% cheaper than diesel alternatives—is encouraging fleet operators to switch.
Product launches and local innovation also play a significant role. Automakers like FAW Toyota are introducing electrified models that constitute nearly half of sales, and new BEV models, such as FAW Toyota bZ5, are expected to boost volumes. Nissan's new EV, the N7, launched in May 2025, is expected to significantly improve sales with competitive pricing and comfort.
The growth in NEV sales is also supported by export growth of smaller BEVs. Smaller A0 and A00-class BEVs account for an increasing share of Chinese NEV exports, up to 43% from 26% the prior year, indicating strengthening international demand.
Infrastructure improvements are anticipated to further accelerate electric vehicle adoption. Standardized, swappable heavy-duty batteries and battery swap stations on key freight corridors are expected to support growing sales.
The surge in China’s NEV sales in 2025 is due to robust demand for BEVs driven by cost benefits, competitive new models, expanding infrastructure, and policy/environmental factors pushing electric adoption over hybrids and fossil-fuel vehicles. This trend is expected to continue, with the industry anticipating a bright future for electric vehicles in China.
In related news, car sales in China increased by 14.7% year-on-year to 2.59 million units in July 2025. However, total car sales fell 10.7% in July 2025 compared to June. In 2024, vehicle sales in China totalled 31.44 million units, a moderate 4.5% increase compared to the previous year. The growth in vehicle sales in 2024 was a considerable slowdown compared to the year before, which recorded 12% growth.
The CEO of Volvo has stated that the car industry needs to 'shape up' to compete with Chinese EVs. Half of the trucks produced at Scania's €2bn production site in China will be exported. The growth in sales of NEVs, particularly BEVs, suggests that the industry is indeed shaping up to meet the challenges posed by the rising demand for electric vehicles.
The surge in China's NEV sales, particularly BEVs, in 2025 is partly due to the industry's introduction of cost-effective electric models, such as the FAW Toyota bZ5 and Nissan's N7, which are expected to boost volumes. The finance sector plays a significant role in this trend, with lower costs of ownership for electric trucks being a key factor encouraging fleet operators to switch. The technology sector also contributes, with standardized, swappable heavy-duty batteries and battery swap stations on key freight corridors anticipated to further accelerate electric vehicle adoption.
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