Electric vehicles account for half of China's auto sales

Sales of new energy vehicles (NEVs) increased 37% in July from a year earlier, accounting for a record 50.7% of total sales, according to data from the China Passenger Car Association (CPCA).

Just three years ago, NEV sales accounted for just 7% of total vehicle sales in China, but massive investments in the electric vehicle supply chain have fueled the growth of the domestic electric vehicle industry, leaving many foreign brands racing to catch up.

In contrast, electric and hybrid vehicle sales in the US accounted for just 18% in the first quarter of this year, according to a US research firm.

NEV growth in China increased from 28.6% in June to 37% in July. Pure electric vehicle sales increased 14.3% in July, compared with a 9.9% increase in June.

Strong growth in NEV sales helped several domestic brands including BYD and Li Auto set new monthly sales records in July.

However, total auto sales in this market fell 3.1%, the fourth consecutive month of decline as consumer confidence declined due to the economy's difficulty in regaining growth momentum amid a prolonged real estate market crisis.

The weakness in the auto market prompted the state planning agency to announce in late July that cash subsidies for car purchases would be doubled - to $2,785 each - and would apply from last April when the subsidies were first introduced.

In addition, some cities that had previously restricted car purchases have eased restrictions. The capital Beijing announced in July that it would expand its NEV license quota by 20,000, the first change in policy since strict regulations were introduced in 2011 to ease traffic congestion and improve air quality.

The long-running price war that has seen a wave of domestic brands compete with newer and cheaper models is slowing as automakers seek to protect profit margins. CPCA Secretary General Cui Dongshu predicted more stability in August and September.

China's top electric carmaker BYD continued to offer discounts in July, but to a lesser extent than in the first half of the year. It slashed prices by as much as 17.3 percent on its Bao 5 hybrid SUV in late July.