EV Milestone: China's Record Production Hits 10 Million Units as Overcapacity Looms

EV Production Reaches Significant Milestone

China's electric vehicle (EV) industry has achieved a major milestone with annual production volume exceeding 10 million units. According to the China Association of Automobile Manufacturers (CAAM), this represents a 4.3% increase from last year, indicating a growing interest in green vehicles. However, this increase has sparked concerns about overcapacity in the automotive sector, particularly as petrol cars become less desirable.

Impact of Rising EV Sales on Market

Phate Zhang, founder of CnEVPost, pointed out that as EVs continue to outsell traditional petrol cars, many production facilities may become redundant. With China's total vehicle manufacturing capacity at 40 million but only 22 million sold annually, the implications for EV battery makers are significant.

• Sales Volume: In 2024, 17.3 million cars sold, a 0.1% decline.
• Subsidies: Heavy government support has fueled the EV boom since 2015.
• Trade Barriers: Increasing tariffs from the US and EU threaten future growth.

Forecasts for the Future

Analysts predict that production and sales of electric vehicles may exceed 12 million units in 2024. The overcapacity issues faced by EV manufacturers are exacerbated by a saturation in batteries, with projections showing an excess in production reaching 4,800 GWh by 2025.

Despite these challenges, China remains the global leader in the electric vehicle market, holding 65% of global sales in the first half of 2024. Continued government incentives, like subsidies, free permits, and tax exemptions, are crucial for maintaining the momentum of this thriving sector.