According to Citigroup's research reports, it is expected that the retail sales of new energy fund in china will increase by +31%/-41%/+25% quarter-on-quarter in the fourth quarter of 2024, the first quarter of 2025, and the second quarter of 2025 respectively, with a more robust year-on-year growth of 66%/34%/26%. The year-on-year changes for internal combustion engine autos are -4%/-39%/-42%.

This is mainly due to 1) consumer behavior in china has shifted towards preference for advanced driver assistance systems (ADAS) and relatively inexpensive plug-in hybrid autos (PHEV) and extended-range electric vehicles (EREV), which has not yet become a common phenomenon in europe and the usa. 2) The pricing of plug-in hybrids/EREVs is lower than that of internal combustion engine autos. 3) Most of the new models to be launched by 2025 are related to new energy fund. 4) The price reduction strategy for traditional internal combustion engine autos has not worked in china, forcing foreign brands to adopt defensive strategies to adjust.

The bank expects that retail sales of passenger vehicles in china will grow by 10.2%/2.9%/2.8% in 2024/2025/2026, while the penetration rate of new energy fund will reach 47.5%/61.5%/74.8%. The growth rate of plug-in hybrids and extended-range vehicles by 2026 will be higher than that of pure electric vehicles, while internal combustion engine autos are expected to decline by -49.2%.