Three of China's top electric vehicle (EV) start-ups reported record monthly sales in July, as a release of pent-up demand in the world's largest market for battery powered cars continues.
The strong sales, which follow a price war in the first half of 2023 that failed to spark demand, have helped put the country's electric car sector back on the fast track, and are likely to offer the slowing national economy a much-needed boost.
Shenzhen-based BYD, the world's largest EV builder, said in a filing to the Shenzhen Stock Exchange after the market closed on Tuesday that it delivered 262,161 units in July, up 3.6% from a month earlier. It broke the monthly sales record for a third straight month.
Beijing-based Li Auto handed 34,134 vehicles to mainland customers in July, beating its previous record of 32,575 units a month ago, while Shanghai-headquartered Nio delivered 20,462 cars to customers, thrashing the record of 15,815 units it set last December.
It was the also the third consecutive month that Li Auto's monthly deliveries had reached an all-time high.
Tesla does not publish monthly sales numbers for it operations in China but, according to the China Passenger Car Association, the American carmaker delivered 74,212 Model 3 and Model Y vehicles to mainland drivers in June, down 4.8 per cent on the year.
Guangzhou-based Xpeng, another promising EV start-up in China, reported sales of 11,008 units in July, a jump of 27.7% from a month earlier.
"Chinese drivers that played a wait-and-see attitude in the first half of this year have made their purchase decisions," said Eric Han, a senior manager at Suolei, an advisory firm in Shanghai. "Carmakers like Nio and Xpeng are ramping up production as they try to execute more orders for their cars."
A price war broke out in China's vehicle market in the first four months of this year as makers of both electric cars and petrol models looked to attract consumers worried about the flagging economy and how that might affect their income.
Dozens of carmakers slashed prices by as much as 40% to retain their market share.
But the steep discounts failed to drive up sales because budget-conscious consumers held back, believing even deeper price cuts might be on the way.
Many Chinese motorists who had been waiting on the sidelines in the expectation of further price cuts decided to enter the market in mid-May as they felt the price-cutting party was over, Citic Securities said in a note at the time.
Beijing is encouraging the production and uptake of EVs to spur an economy that expanded by a below-forecast 6.3% in the second quarter.
On June 21, the Ministry of Finance announced that electric car buyers will continue to be exempt from a purchase tax in 2024 and 2025, a move designed to further propel EV sales.
The central government had previously stipulated that exemption from the 10% tax would be effective only until the end of this year.
Total sales of pure electric and plug-in hybrid vehicles across the mainland in the first half of 2023 increased by an annual 37.3% to 3.08 million units, compared to a 96% sales surge in the whole of 2022.
EV sales in mainland China will rise by 35 per cent this year to 8.8 million units, UBS analyst Paul Gong forecast in April.