China's New Energy Vehicle (NEV) sales surge 27% compared to the previous year, reaching 1.26 million units in July according to data released by China's automobile industry administrator.
First-ever Year-on-Year Decline in Plug-in Hybrid Electric Vehicle Sales in China
In a significant shift for the Chinese automotive market, plug-in hybrid electric vehicle (PHEV) sales experienced a decline in July 2022. This marks the first time such a year-on-year drop has been recorded, according to data released today by the China Association of Automobile Manufacturers (CAAM).
Key contributing factors to this decline include:
- Accelerated decline in PHEV sales: Major players like BYD reported a steady increase in the decline of PHEV sales, with a 22.6% year-over-year drop in July 2025. This decline has been accelerating since April, indicating weakening demand for PHEVs.
- Shift in consumer preference toward BEVs: Battery electric vehicles (BEVs) have shown strong growth, with BYD’s BEV sales growing 36.8% year-on-year in July 2025. This growth is attributed to longer driving ranges and improved charging infrastructure, making BEVs more attractive compared to PHEVs.
- Market seasonality and policy environment: The July decline coincides with a usual off-season in the auto market when manufacturers conduct annual maintenance, leading to slower sales activity. Meanwhile, ongoing trade-in policies and new model launches influenced sales dynamics but did not fully offset the PHEV sales drop.
- Increased internal competition and pricing pressures: Local brands gained market share with diversified EV models and competitive pricing, intensifying competition and possibly crowding out some PHEV sales, especially from traditional joint venture brands.
- Decline in specific PHEV segments: Extended-range electric vehicles (EREVs), a subtype of PHEV, also saw notable sales declines, reflecting the overall weakening in the hybrid segment.
While PHEV sales declined, BEV sales showed resilience, with a total of 811,000 units sold in July, up 47.1 percent year-on-year but down 5.59 percent from June. This is the lowest year-on-year growth rate for PHEVs since at least January 2021.
In terms of exports, China shipped 141,000 BEVs overseas in July, a 83.6 percent year-on-year increase and an 8.3 percent increase from June.
The NEV sales figures represent wholesale sales by automakers, including sales in China and exports to overseas markets. After excluding exports, domestic NEV sales in July totaled 1,037,000 units, up 16.9 percent year-on-year but down 7.8 percent from June. This marks the first time that NEV retail sales in China have declined year-on-year.
The ongoing shift towards BEVs in China's automotive market is a reflection of practical advantages and changing consumer preferences, making BEVs a more attractive choice for consumers and manufacturers alike.
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