In July, the penetration rate of new energy vehicles (NEVs) in China officially surpassed 50%! From "following" to "leading," it has not been an easy journey for Chinese NEV manufacturers over the past 20 years.

In July 2004, the penetration rate of new energy vehicles in China officially broke through the 50% mark, reaching 51.1% for the entire month, compared to a penetration rate of 36.1% in the same period last year. This means that for every 100 cars sold, 51 are new energy vehicles. And this is just the beginning. As more and more new energy models hit the market and an increasing number of consumers begin to recognize and accept new energy vehicles, the penetration rate of new energy vehicles will quickly surpass 60%, 70%, 80%, and eventually completely replace fuel-powered cars.

I. After 30 years, China's new energy vehicles have finally succeeded.

Looking back at the rise of China's new energy vehicles, one can describe it with two words: arduous!

In 2003, China's new energy vehicles were still in a "destitute" phase, with little policy support and no domestic industry chain that matched the needs of new energy vehicles. The core technologies of new energy vehicles were still in the hands of Japanese and Korean companies, such as batteries, motors, and electronic controls. As a result, all Chinese car brands at the time chose to purchase technology rather than develop it independently.

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Today, BYD, a leader in domestic new energy vehicles, has just completed the acquisition of Beijing Jichi Automobile Mould Factory, officially joining the ranks of car manufacturing and focusing on electric vehicles. Having crossed over from the battery industry to automobile manufacturing, BYD, as an "outsider," has experienced many failures but has not lost its ambition to manufacture cars.

Starting from 2008, BYD focused on hybrid technology and boldly innovated. After four technological iterations, it successively launched the DM-i hybrid models, which are oriented towards economy and主打 low fuel consumption, and the DM-p hybrid models, which excel in power performance and significantly optimize hybrid control logic.

In 2012, BYD achieved a key breakthrough in "plug-in hybrid" technology. Building on foreign technology, BYD made innovative achievements in core technology areas such as ternary lithium batteries, battery management systems, and BMS, and launched its first pure electric vehicle. Since then, the new energy vehicle market began to show a momentum that could compete with traditional fuel vehicles.

By May of this year, BYD's fifth-generation DM technology was introduced, covering its range from sedans to SUVs, further aiding the penetration rate of new energy vehicles in the Chinese market. Currently, BYD's contribution rate to new energy vehicles has exceeded one-third!

II. Driven by policy and accelerated by innovation, China's new energy vehicles are rising strongly.After 2015, new energy vehicles (NEVs) began to rise rapidly under the joint promotion of policies and the market.

In terms of policy promotion, the "Made in China 2025" plan clearly stated in 2015 that it is necessary to accelerate the development of energy-saving and new energy vehicle industries, promote innovation in new energy vehicles and new energy industries, and cultivate new energy vehicles as a breakthrough and growth point for the transformation and upgrading of China's automotive industry.

The clear signal released by "Made in China 2025" in the field of new energy vehicles is that, like the internet, new energy vehicles are a strategic industry for the country. With policy support, new energy vehicles have entered a stage of independent innovation led by enterprises. Since then, new energy vehicles have ushered in an "explosive" development.

In 2020, new energy vehicles such as "Wei Xiao Li" emerged. In 2021, Tesla localized its production, and in 2023, BYD topped the global new energy vehicle sales, with domestic new energy vehicle sales breaking through 9.495 million units in the same year, becoming the second largest segment in the Chinese automotive market. Now, with the breakthrough of the penetration rate of new energy vehicles, the rise of China's new energy vehicle industry has become unstoppable.

III. Why can Chinese new energy vehicles "counterattack" traditional fuel vehicles?

1. The Chinese market has developed a mature technological path.

The Chinese new energy vehicle industry has an excellent "growth environment", from battery raw materials to new energy vehicle components, and then to the internet ecosystem, the entire industry chain promotes the process of electrification and intelligence, forming a complete industry chain system.

Represented by BYD, Chinese new energy vehicle companies have formed a mature technological path dominated by plug-in hybrids, supplemented by pure electric and range extenders after 2012.

Subsequently, with the continuous optimization of technology, plug-in hybrid technologies such as BYD DM-i, Great Wall Lemon DHT, and Geely's Thor intelligent hybrid have emerged one after another, greatly improving the cost performance of new energy vehicles and breaking the technical suppression of domestic cars by Japanese, American, and German cars.

2. The industry chain has strong support and excellent cost control capabilities.The rapid development of China's new energy vehicles (NEVs) can be attributed to a comprehensive and mature industrial chain system. From mineral mining to raw material refining, to raw material processing, to automotive parts, to complete vehicle manufacturing, and even to vehicle software and operating systems, Chinese automakers have achieved "self-sufficiency." With a new energy vehicle, they have leveraged a trillion-level industrial cluster.

Thanks to the mature industrial chain, Chinese NEV manufacturers can control the cost of cars within 200,000 yuan. Compared to Japanese, German, American, and even Korean and European fuel vehicles, they have a cost advantage.

3. Consumer psychological recognition is on the rise, making new energy vehicles the first choice for consumers when purchasing a car.

With the rapid increase in sales, consumers' perception of the performance, user experience, and cost of using new energy vehicles has reached a sufficient depth. This will change the general consumer group's cognition and acceptance of new energy vehicles, and will also achieve a reversal and gradual replacement of fuel vehicles.

Nowadays, the terminal sales of joint venture fuel vehicles can be described as a collapse, especially with Japanese car manufacturers experiencing double-digit declines. The residual value of fuel vehicles is rapidly declining, and the prices of used cars are collapsing. Joint venture fuel vehicles are increasingly difficult to gain the recognition of Chinese consumers, and even selling at a discount does not win favor.

4. Chinese brand automakers take the lead in laying out overseas markets.

In 2023, China's new energy vehicle sales reached 4.91 million units, officially becoming the world's largest exporter of automobiles.

It should be noted that for several decades, Chinese car companies have been fiercely competing in the domestic market, but have been "lackluster" in foreign markets. This is because we did not have independent intellectual property rights in the core areas of passenger cars, such as transmissions, engines, and chassis. However, with Chinese new energy vehicle companies like BYD taking the lead in opening up overseas markets, Chinese car companies have fully achieved external output from products to technology.

IV. Conclusion.

With the rise of the new energy vehicle market, Chinese car companies have officially made the leap from "following" to "leading." As more and more new energy vehicle manufacturers join and more consumers recognize the value, the Chinese new energy vehicle market will officially enter a period of "explosion."In the future, new energy vehicles will replace fuel-powered cars and become the absolute mainstream in the domestic automotive market.