(Yicai Global) Dec. 3 -- Sales of new energy vehicles in China are likely to reach 1.16 million units this year, according to market research firm IDC.

The country’s NEV market is also expected to grow at a compound annual rate of 36 percent in the five years through 2025, driven by government policies and other factors, IDC said in an official WeChat post today.

IDC expects sales to grow significantly from next year to 2022 thanks to the post-Covid-19 rebound in China’s auto market, the world’s largest, and the extension of financial subsidies.

As subsidies are scaled back, the market will return to a relatively stable growth level after 2023 and by 2025 NEV sales will reach about 5.42 million, IDC said, adding that the market share of pure electric vehicles will jump to 90.9 percent in 2025 from 80.3 percent this year.

China’s NEV sales reached 1.206 million units last year, a year-on-year drop of 4 percent, according to the China Association of Automobile Manufacturers.

IDC believes that promotion of national policies, the transformation demands of manufacturers, advancement of battery technologies, progress in autonomous vehicle development, and new consumption concepts will spur a rapid expansion in China’s NEV market through 2025.

But there are also constraints. First, consumers have many concerns about NEVs, such as long-distance driving, battery degradation and safety issues, as well as the lack of price advantage after the withdrawal of subsidies. These concerns will likely be a barrier to sales.

Second, it will still take time to improve the necessary infrastructure as the availability of charging piles is far from the level of gas stations and there is a certain lag in meeting market demand.

But with the increasing maturity of NEV products and a gradual improvement in infrastructure construction, the impact of these constraints will weaken over the next five years, IDC predicted.

Editor: Peter Thomas