Assessment of leading new energy vehicle city markets in China and policy lessons



In 2020, the top 30 city markets for new energy vehicles (NEVs) in China were home to nearly 70% of all new NEV registrations in the country. Using data covering the period from 2015 to 2020, this report explores the successful experiences from leading NEV cities in China and is intended as a guide for other similar cities, both within China and around the world. Wherever illuminating, the study also compares the NEV market characteristics by China’s unofficial-but-popular city tier system.

For new energy passenger cars, results show that while Tier 1 and New Tier 1 cities played a pivotal role in driving the market in both 2015 and 2020, growth in Tier 2–5 cities had gained traction by 2020 (see figure). Brand diversity also increased dramatically and in 2020, manufacturers sold to more markets beyond their home markets than they had in 2015. This suggests that local market protectionism has mostly been rectified.

China city markets figlanding

Figure. Share of new energy passenger car registrations by Chinese city tier in 2015 and 2020.

The authors also found that new energy models for all commercial vehicle types—urban logistics vehicles, dump trucks, tractor trucks, buses, coaches, and other utility vehicles—are now widely available, and range from a few hundred models for buses to a few dozen for the heaviest tractor trucks. With respect to areas where China might increase investment and policy focus to make more progress in the coming years, urban and regional freight and Tier 3–5 cities stand out. Cities and provinces still rely heavily on internal combustion engine vehicles for cross-region freight delivery and there is immense potential to utilize new energy trucks to fulfill local and regional freight transportation needs. Additionally, the accelerated urbanization and modernization process in small Chinese cities and towns is expected to lead to huge car demand. With effective policies and sufficient model availability, these cities can become large adopters of NEVs.