TMTPOST--July marked a milestone in China's automotive industry as sales of new energy passenger vehicles (NEVs) surpassed those of traditional gas-powered cars for the first time.

The retail sales of NEVs last month reached 878,000 units, compared to 840,000 units for oil-fueled cars, according to data released by the China Passenger Car Association (CPCA). With this, the market penetration rate of NEVs rose to 51.1%, indicating a shift in the automotive landscape where new green license plates are becoming the majority of total new licenses.

The dominance of NEVs highlights growing challenges for the gasoline car industry. The window for transitioning to cleaner energy vehicles is shrinking rapidly, and oil-fueled car manufacturers must accelerate their pivot to remain competitive.

The data also underscores the declining market share of joint venture brands, driven by the strengthening position of leading companies in the NEV sector. BYD, a pioneering automaker, stands out with its stellar performance. The company’s fifth-generation DM technology, launched in May, spans its entire range of models, and the sales exceeded 340,000 units in July.

Consumer preferences are changing rapidly, with an increasing number of oil-fueled cars buyers transitioning to NEVs. While oil-fueled cars are simply vehicles, electric vehicles can be intelligent mobile terminals. In terms of product experience—charging speed, battery range, power, quietness, and smart features—electric vehicles are outperforming oil-fueled cars in nearly every aspect. BYD's hybrid technology, combining fuel, plug-in, range-extending, and pure electric functions, exemplifies this shift.

Moreover, Huawei's recent decision to cease car manufacturing and instead focus on supplying intelligent driving systems could lead to more collaborations between Chinese automakers and Huawei. With Huawei's expertise in intelligent driving, reports suggest that BYD and Huawei have teamed up, further widening the gap between NEVs and oil-fueled cars in terms of product experience.

BYD led the market with sales hitting 1.607 million units in the first half of the year. Chery, Geely, and Changan occupied the third to fifth positions, with sales coming in at 1.057 million, 955,000, and 809,000 units, respectively.

Additionally, data for January-July 2024 shows that NEV makers met their sales targets, with AITO leading with 55.7% of its annual target, followed by NIO and Zeekr at 46.9% and 45%, respectively.

The increase in NEV market penetration is expected to impact oil-fueled cars across various usage scenarios, including refueling, maintenance, and parking.

The growth in NEV penetration is driving the development of maintenance systems focused on NEVs, potentially leading to lower insurance costs. BYD is already addressing this pain point for NEV owners by cutting insurance fees.

Besides, repair shops are increasingly shifting to NEV services, which may impact oil-fueled cars maintenance and after-sales services. China's 900,000 repair shops, currently sustained by the large oil-fueled cars market, could face a lack of vehicles to service as the market shrinks.

Declining oil-fueled cars sales could lead to the closure of some gas stations, particularly in remote areas, making refueling less convenient. Meanwhile, the coverage of charging stations is expanding, narrowing the gap in convenience between oil-fueled cars and NEVs.

With the development of NEVs, parking spaces for oil-fueled cars are being squeezed. Many parking lots, especially in tourist areas and shopping malls, are now equipped with charging stations, giving NEVs an advantage in parking options. This could influence consumer decisions in favor of NEVs.

As the oil-fueled cars industry faces these challenges, it is clear that the shift toward NEVs is inevitable. Oil-fueled cars manufacturers, owners, consumers, and those involved in the oil-fueled cars supply chain must prepare for this transition.