Over 65% of cars sold in China are now EVs as Iran war drives electric shift

China has reached a historic milestone, with over 65% of the 1.54 million cars sold last month being electric or plug-in hybrids, according to figures released by the China Passenger Car Association (CPCA). This surpasses the previous peak of 65.1% set just one month prior. Experts attribute this surge to the growing confidence in electric vehicles (EVs) and the diminishing range anxiety.

Zhao Zhen, a sales director at Shanghai-based auto dealer Wan Zhuo Auto, notes that consumers are increasingly convinced of the advantages of EVs. The rapid adoption of EVs comes as overall vehicle sales in China decline due to an economic downturn. Petrol car sales plummeted by 40% year-on-year, while EV deliveries fell by 10.1%, the CPCA data reveals.

The Iran war is accelerating this electric vehicle shift, as the conflict drives up fuel costs and prompts more Chinese consumers to opt for petrol-free vehicles. Additionally, the introduction of numerous new EV models with advanced driver assistance systems and other cutting-edge technologies has played a significant role in convincing millions of buyers.

With global oil prices far above pre-Iran war levels, a barrel of Brent crude currently stands at around US$97, up 34% from late February. This has led to an estimated 2,000 yuan (US$298) increase in annual fuel costs for petrol car drivers. China's infrastructure for EV charging has expanded significantly, with the country boasting 5.1 million public charging stations as of July, a 21.3% increase from the previous year.

Household charging piles have also seen a surge, reaching nearly 18.6 million, marking a 48.8% year-on-year rise. Despite Beijing reducing purchase subsidies and tax incentives for electric cars, the EV penetration rate continues to climb. Buyers of a 100,000 yuan electric car now receive a subsidy of 12,000 yuan, a 40% decrease from last year.

They also face a 5% vehicle purchase tax, whereas EV purchases were tax-exempt before. In the first eight months of the year, Chinese carmakers delivered a total of 6.67 million EVs to domestic consumers, a decline of 11.6% compared to the same period last year, as reported by the CPCA.