By Gabby Chen

(JW Insights) Feb 13 -- China's production and sales of new energy vehicles (NEVs) reached 425,000 and 408,000 units in January, respectively, down 46.6% and 49.9% month-on-month, and dropped 6.9% and 6.3% year-on-year. They account for 24.7% of all car sales, according to the China Association of Automobile Manufacturers (CAAM).

Meanwhile, the China Passenger Car Association (CPCA) forecast that China's NEV sales may exceed 8.5 million in 2023, based on annual sales of 6.5 million in 2022.

In January, China's auto production and sales hit 1.594 million and 1.649 million, respectively, a decrease of 33.1% and 35.5% month-on-month, and down 34.3% and 35% year-on-year, according to CAAM.

Compared with the Chinese New Year holidays in February 2022, production and sales volume in January this year dropped 12.1% and 5.1%, respectively.

CAAM pointed to multiple factors that led to the unsatisfactory performance: the January's effective production and operation time is only about 60% of the normal period due to the earlier Chinese New Year holidays in 2023. In addition, auto companies launched many car purchase incentives in December last year, overdrawing part of the demand in advance.

The NEV market structure is being reshaped, with tougher competition as the removal of the country's purchase subsidies and more traditional automakers transitioning to NEVs, said the JW Insights report.