China's EV Sales Soared in 2022 as Overall Auto Market Stalled

Sales of new-energy vehicles in China nearly doubled last year, even as overall car sales remained sluggish with auto makers facing severe production disruptions and economic challenges under strict anti-Covid-19 measures.
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The China Passenger Car Association said Tuesday that China sold 5.67 million electric vehicles and plug-in hybrids in 2022. This is up from 3.67 million the year before and is due to state subsidies and high oil prices, which have led buyers to switch from gas-guzzling models.
More than 4 million new-energy vehicles were sold in China last year, five times more than in the United States. This cemented China's place as the world's top EV market.
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Electric and plug-in hybrid vehicles saw sales soar in China last year, while sales of traditional cars shrank by 13%. This made for a tough year for auto makers, despite the strong EV sales.
Overall, passenger-car retail sales climbed 1.9% from 2020 to 20.5 million, according to the CPCA data. That was down from more than 4% growth in 2020 from the year before.
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This year may be challenging for auto manufacturers due to a sluggish global economy, higher interest rates in the U.S., and a large inventory held by China’s manufacturers and dealers, according to CPCA’s Secretary-General Cui Dongshu. China may see around 1% annual growth in its car market, with fewer sales in the earlier months before they pick up speed toward the end of the year, he said.
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This year's new-energy car sales might not be as explosive as in the past, as lower oil prices could lead some consumers back to traditional vehicles, according to one analyst. Growth could slow to around 30% this year from 2022.
China's auto market has seen a slowdown in recent years, after a long period of rapid growth that attracted many of the world's leading auto manufacturers. Foreign joint ventures are especially struggling to maintain their market share in China as more domestic brands successfully capture the booming EV market and overall sales stagnate.
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BYD Co. replaced Volkswagen AG's joint venture with FAW Group Co. as the top retail sales chart in 2022.
BYD's sales of all-electric cars and plug-in hybrids more than tripled from a year earlier to 1.86 million cars in 2022. Geely Automobile Holdings Ltd. sold more than 262,000 EVs in 2022, of which around 72,000 were from Zeekr, its premium EV brand launched in late 2021.
Tesla Inc. delivered more than 710,000 EVs from its Shanghai factory last year. In December, it sold around 42,000 cars in China, a drop from November. Despite starting to offer discounts, Tesla's sales in China have been declining.
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In order to increase sales, Tesla announced a series of price cuts and discounts on its Model 3 and Model Y vehicles, making them more competitive with other midrange EVs from domestic competitors such as BYD, which is backed by Warren Buffett.
Tesla's prices for its two most popular electric-car models were cut again last week, by as much as 13%. The Model 3's starting price in China is now 30% cheaper than in the United States.
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China's car sales fell sharply in April from a year earlier, as the country's major auto-manufacturing hubs in Shanghai and northeastern cities were hit by weeks of lockdowns. This led to a significant reduction in production capacity, as people were confined to their homes and industries had to either stop production or operate at reduced capacity. This caused severe disruptions to supply chains.
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Tesla, Volkswagen and Nissan Motor Co. were among the hardest hit manufacturers during a three-month slump that ended in May. Tesla's deliveries were down more than 90% in April compared to the previous year. The impact of Covid-19-related disruptions ricocheted beyond China, causing Toyota Motor Corp. to suspend assembly lines in Japan.
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The Chinese car market saw explosive growth in June, but that fizzled out toward the end of the year in a sign that the nation’s economy was feeling the impact from a year of zero-Covid policies. Appetite for new cars began to damp in September and by November it shrank by more than 9% compared with a year earlier.
In December, China’s car sales rose 3% from a year earlier to reach 2.17 million units. Consumers took advantage of the final weeks of vehicle tax cuts and new-energy car subsidies before they expired at the end of the year.