Electric vehicle sales are expected to outperform combustion engine vehicle sales in China in 2025, outrunning the pace of EV adoption in the U.S. and Europe.

What Happened: Beijing had set a target in 2020 for EVs to account for 50% of car sales by 2035. However, as per Financial Times, the target would be reached next year, ten years ahead of schedule.

As per the report, EV sales in China, including battery electric vehicles and plug-in hybrids (together referred to as new energy vehicles or NEVs), will rise by 20% year-on-year to over 12 million cars next year.

Combustion engine vehicle sales, meanwhile, will fall by over 10% to less than 11 million, the report said, citing estimates by investment banks UBS and HSBC and research groups Morningstar and Wood Mackenzie.

This marks a stark contrast to the situation in Europe and the U.S. where EV demand is slowing down.

Why It Matters: China is the world’s biggest car market and also Tesla Inc.’s (NASDAQ:TSLA) second biggest market after the U.S. Major EV players in China will likely benefit from the rise in demand next year including BYD Co. Ltd. (OTC:BYDDY), Geely Automobile Holdings (OTC:GELYY), Tesla, Li Auto Inc. (NASDAQ:LI), and others.

BYD, for instance, held 34.5% of China’s new energy market in the January-November period. Geely seconded BYD with an 8% market share and Tesla held the third position with a 6% market share.

According to data from the China Passenger Car Association, BYD sold 417,232 new energy passenger vehicles in China in November on retail. Tesla and Geely sold 73,490 and 120,896 new energy vehicles, respectively, in the period.

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Photo courtesy: Tesla