More than half of new cars sold in China are now electric or hybrid

BEIJING — For the first time in China, new energy vehicles have outsold traditional fuel-powered passenger cars on a monthly basis, according to China Passenger Car Association data for July.

New energy vehicles include battery-only and hybrid-powered cars. The category accounted for 51% of new passenger cars sold in China last month, according to a release late Thursday.

That’s up from a penetration rate of 36% exactly a year ago, and a dip below one-third in January, according to CNBC calculations of passenger car association data.

The reliability of the association’s data has been questioned in the past. The latest report showed that battery-only cars outsold hybrid ones in July — for a battery-only penetration rate of 28%.

However, monthly sales and delivery figures from BYD, Li Auto and other car companies indicated consumers in China increasingly preferred hybrid-powered vehicles.

July data from the China Association of Automobile Manufacturers was not yet available.

China is the world’s largest car market. But overall economic growth has slowed, while intense competition in the new energy vehicle category has prompted a price war.

Passenger car association data showed overall auto sales fell by 2.8% to 1.72 million vehicles in July. Retail sales of new energy vehicles surged by nearly 37% to 878,000 cars in July.

The Chinese government has supported the domestic new energy vehicle industry for more than a decade with subsidies and favorable policies. Authorities’ latest trade-in policy to boost consumption has also focused on giving buyers of new energy cars the most support.

Other preferential policies at a city level include unrestricted access to public roads, while gas-powered cars may only be allowed to drive on those streets for part of the week.

New energy vehicles have yet to take off as quickly in the U.S.

The penetration rate in the first quarter was 18%, down from 18.8% in the fourth quarter of 2023, according to the latest publicly available estimates from Wards Intelligence, cited by the U.S. Energy Information Association.