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

China's electric vehicle (EV) adoption rate has reached an all-time high, with 65.2 percent of the 1.54 million cars sold in mainland China last month being either pure electric or plug-in hybrid vehicles, according to data from the China Passenger Car Association (CPCA). This marks a 0.1 percentage point increase from the previous record set the previous month.

Zhao Zhen, a sales director at Shanghai-based auto dealer Wan Zhuo Auto, believes that consumers are now confident in the advantages of EVs due to the range anxiety being largely alleviated. The shift towards electric cars is occurring as overall vehicle sales in China slow down due to an economic slowdown. Petrol car sales plunged 40 percent year on year last month, while EV deliveries fell by a more modest 10.1 percent.

The Iran war is accelerating this electrification shift as rising fuel costs prompt more Chinese consumers to avoid petrol vehicles. The debut of hundreds of new EV models featuring advanced driver-assistance systems and other new technologies has also played a role in convincing millions of buyers to purchase a new vehicle. Global oil prices remain significantly higher than pre-Iran war levels, with Brent crude at around US$97 per barrel, 34 percent above the price in late February when the conflict began.

If oil prices stay around US$90 per barrel, Chinese petrol car drivers will see their annual fuel costs increase by roughly 2,000 yuan (US$298) compared to pre-war levels. China has been actively expanding its charging infrastructure, with 5.1 million public EV charging stations as of the end of July, a 21.3 percent increase from the previous year.

Household charging piles have reached nearly 18.6 million, a 48.8 percent increase year on year. Beijing has continued to roll back purchase subsidies and tax incentives for electric cars, with buyers of a 100,000 yuan electric car now receiving a subsidy of 12,000 yuan, down 40 percent compared to last year, and now required to pay a 5 percent vehicle purchase tax.

From January to August, Chinese carmakers delivered a total of 6.67 million EVs to domestic consumers, a 11.6 percent decrease from the previous year.