具体来看，汇丰分析师Yuqian Ding表示，2024年中国新能源汽车（包括电动车和插电混动车）的销量占比已达到50%，预计这一比例将在2025年达到60%，2026年为69%，2030年接近99%，本地品牌将获得相应的市场份额。
HSBC expects that the narrative of price wars and Industry consolidation will continue, as BYD and Tesla will further expand their competitive advantages through price wars, while companies with annual sales of less than 30,000 vehicles have a low chance of long-term survival.
As 2025 approaches, the penetration speed of electric vehicles in China is accelerating, and competition among industry players is intensifying. Who will come out on top?
In a report published by HSBC on January 7th, the development trend of the electric vehicle market in China this year is outlooked, with the penetration speed of electric vehicles accelerating. Local brands are gaining market share, and the pace of industry consolidation will rapidly accelerate, with the strong becoming stronger and the weak struggling to survive. At the same time, autonomous driving and overseas expansion will become new growth poles.
Specifically, HSBC analyst Yuqian Ding noted that in 2024, the sales proportion of new energy vehicles in China (including electric vehicles and plug-in hybrid vehicles) will reach 50%. This proportion is expected to reach 60% in 2025, 69% in 2026, and close to 99% by 2030, with local brands gaining corresponding market share.
Furthermore, this rapid transformation is sparking fierce competition in the global automotive industry. HSBC expects that the narrative of price wars and industry consolidation will continue, with BYD and Tesla expanding their competitive advantages through price wars, while companies with annual sales of less than 0.03 million vehicles will have low chances of long-term survival.
In addition, the penetration rate of autonomous driving will exceed the critical point of 10%. As more advanced features are introduced into mass-market models priced below 0.2 million yuan by 2025, adoption rates will accelerate. Meanwhile, overseas market expansion presents both opportunities and risks.
The penetration speed of electric vehicles is accelerating, and local brands are gaining market share.
HSBC states that the penetration rate of new energy vehicles is rapidly increasing:
In 2024, the sales share of New Energy Vehicles (including electric and plug-in hybrid vehicles) in China has reached 50%, up from only 5% in 2019. This ratio is expected to reach 60% by 2025, 69% by 2026, and nearly 99% by 2030. This rapid transformation has led to intense competition in the Global Auto Industry, especially posing significant challenges to traditional RBOB Gasoline vehicle manufacturers, with an expected 20% year-on-year growth in New Energy Vehicle sales and a 24% decline in internal combustion engine vehicle sales by 2025.
This has led to a continuous decline in RBOB Gasoline vehicle sales, with local brands gaining relative market share:
RBOB Gasoline vehicles are in a downward spiral, with only 11 million units sold in the first 11 months of 2024, a significant year-on-year decline of 52%. Traditional Auto Manufacturers are facing the dilemma of capacity cuts, budget reductions, and shrinking dealer networks. For example, the profits of German and Japanese car manufacturers and their joint ventures have plummeted, and their market share continues to be eroded by local brands.
Local brands are gaining market share from international competitors. Domestic electric vehicle brands have successfully developed and marketed smart electric vehicles that attract young, tech-savvy consumers. The top ten brands by market share growth in the Chinese market in 2024 are all local brands, such as BYD (market share 35%), Geely, and Xiaomi, while brands experiencing a decline in market share are mostly joint ventures focusing on internal combustion engines, like FAW-Volkswagen and GAC Honda.
It is worth mentioning that HSBC has indicated that plug-in hybrid electric vehicles (PHEV) and extended-range electric vehicles (EREV) are on the rise:
In the entire electric vehicle market, plug-in hybrid vehicles (PHEV) and extended-range electric vehicles (EREV) are experiencing rapid growth. The sales share of PHEV and EREV in 2024 is expected to increase from 33% in 2023 to 42%. These models are popular among consumers in lower-tier cities due to their adaptability (suitable for both long and short-distance driving) and relatively lower prices. Currently, BYD leads the PHEV market, while Li Auto and AITO dominate the EREV market, a trend that is expected to continue, with more electric vehicle manufacturers launching a wider variety of PHEV and EREV models.
The strong become stronger while the weak struggle to survive, accelerating the pace of industry consolidation.
At the same time, this rapid transformation may trigger the fiercest battle in the Global Automotive Industry. HSBC predicts that the stories of price wars and industry consolidation will continue, with the strong becoming stronger and the weak struggling to survive, leading to a temporary shrinkage in profits and profit margins, thereby putting greater pressure on the weakest links.
HSBC stated that market consolidation is accelerating:
As of 2024, China has over 300 domestic electric vehicle models and about 100 electric vehicle manufacturers, but market concentration is rapidly increasing. All signs point to a simple fact — the stronger get stronger, and the weaker struggle to survive. In the first 11 months of 2024, the market share of the top ten New energy Fund manufacturers increased from 73% in 2022 to 78%. BYD's market share alone has exceeded the combined total of ranks two to seven. Meanwhile, 32 brands have annual sales of less than 0.03 million units, with low likelihood of long-term survival.
HSBC expects that price wars in the Industry will continue:
BYD and Tesla are further expanding their competitive advantages through price wars, but this has also led to a decline in overall profit margins in the Industry. Even the leading player, BYD, has a net income margin of only 5%. Market consolidation and price wars are expected to continue, but overall profits and profit margins may be further compressed in the short term, increasing pressure on weaker companies.
When BYD and Tesla lower their prices, most competitors have almost no choice but to follow suit. This clearly squeezes profit margins across the entire Auto Manufacturers sector, especially with electric vehicles currently holding all the power.
Autonomous driving is breaking through a critical point, with commercialization accelerating.
Progress in autonomous driving has been made, with HSBC stating that the penetration rate of autonomous driving has surpassed the 10% tipping point and will further increase this year.
In 2024, the penetration rate of mid-level autonomous driving functions (such as L3 and above) in China's new energy vehicle market has reached 17% (including Tesla); excluding Tesla, it is 11%. The localized production of Tesla's Full Self-Driving (FSD) function and the launch of cost-effective autonomous driving models by BYD and Xpeng will further drive penetration rate increases.
Basic L2 functions (such as automatic lane changing and automatic parking) have become widespread, but consumer demand and willingness to pay for advanced features (such as urban road autonomous driving and door-to-door navigation) have significantly increased. The commercialization of L3 level functions becomes crucial, especially in urban autonomous driving scenarios (such as fully autonomous driving from parking lot to parking lot, D2D functionalities).
HSBC further stated that electric vehicle manufacturers are using AI-driven models and large datasets to accelerate commercialization, while advancements in the robot taxi market indicate a broader transformation.
Auto manufacturers are adopting AI algorithm architectures based on large models (LLM) instead of traditional rule-driven models. For example, optimizing algorithm performance using video 'fragments' rather than mileage data. BYD and Xpeng are expected to launch mainstream models priced below 0.2 million yuan in 2025, which will be equipped with higher levels of autonomous driving features. The adoption rate will further accelerate.
Waymo's Robotaxi service in the USA has achieved 0.175 million paid trips weekly, showing rapid development in the L4 level Robotaxi market. This progress has positive implications for smart electric vehicle companies and the autonomous driving supply chain, with Xpeng planning to commercialize its Robotaxi business by 2026.
Expansion into overseas markets: opportunities and risks coexist.
HSBC stated that exports represent a growth opportunity, but they also face multiple challenges.
In the first 11 months of 2024, China's Passenger Vehicle export volume increased by 23% year-on-year to 5 million units, of which New energy Fund vehicles accounted for 1.8 million units. The growth mainly came from Emerging Markets, such as Eastern Europe, Southeast Asia, and South America. However, geopolitical risks (such as Russia raising automobile import taxes) and Exchange Rates fluctuations put pressure on exporters' profitability.
Establishing production bases in overseas markets (such as BYD's plan to start production in Brazil in 2025) will promote expansion, but it is necessary to overcome labor, legal, Eco-friendly Concept, and other challenges. Only the strongest financial companies can cope with these issues.
