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In the first half of April, the sales penetration rate of new energy vehicles (NEVs) surpassed 50% for the first time, a historically significant figure that signifies consumers purchasing fuel vehicles have officially become the minority. At this turning point in the era, we cannot help but ask, is the era of fuel vehicles truly coming to an end?

I. Wang Chuanfu's Prediction Comes True

In March 2024, Wang Chuanfu, the founder of BYD, boldly predicted at the China Electric Vehicle Hundred Person Forum that the market penetration rate of new energy vehicles would break through 50% within three months. Little did we know that just 20 days later, this prediction would become a reality.

According to data released by the China Passenger Car Association, domestic car sales in March reached 2.694 million units, a month-on-month increase of 70.2%, with the retail penetration rate of new energy vehicles reaching 50.39%. Behind this figure lies a significant transformation in China's automotive market. In just five years, the penetration rate of new energy vehicles has increased tenfold, achieving the national "green transportation" plan's 50% target 11 years ahead of schedule.

Once upon a time, fuel vehicles, as an important foreign capital joint venture project that China has been continuously introducing for decades, have gradually cultivated a mindset of trust and reliance on "foreign brands" among Chinese consumers. However, with the rise of domestic automotive forces, this entrenched notion has finally been shattered, never to return.

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From the important dimension of evaluating the value of a car—residual value—according to the "2023 Annual Report on the Residual Value of Chinese Cars" released by the China Automobile Circulation Association and Jingzhen Estimation, the residual value of fuel vehicles continues to decline, while new energy models, especially some new models, have shown a higher residual value.

II. Collective Retreat of Japanese Brands

As Chinese new energy vehicle brands rise, Japanese brands, once the biggest beneficiaries of domestic car sales, are experiencing a collective retreat in the Chinese market.

The terminal sales of joint venture fuel vehicles in March can be described as a collapse. Brands such as Toyota and Honda, once the "top brands" of joint venture vehicles, now cannot compare with the performance of new energy vehicle brands in the market. Except for FAW Toyota, which ranks 9th, all others have been kicked out of the top 10.

Of course, as established giants in the fuel vehicle industry, Japanese cars have not been without attempts to transition to the new energy track.Previously, Japanese brands have tested almost every one of their main models, with Toyota even seeking cooperation with BYD to launch a series of hybrid vehicles. However, in the face of the huge cake that is the new energy market, the sales of Japanese models have not been satisfactory.

III. Conventional fuel vehicles and new energy vehicles will coexist for a long time

The rise of new energy vehicles is not only due to policy promotion but also because of their own advantages. In terms of power, quietness, and intelligence, new energy vehicles have comprehensively surpassed traditional fuel vehicles. Coupled with the lower usage costs and better travel experience of new energy vehicles, consumer acceptance of new energy vehicles is increasing.

From the entire automotive industry chain, new energy vehicles have also provided sufficient technology and capital for China's automotive industry in the manufacturing of key components such as batteries, motors, and electronic controls. This has accelerated the construction of technological facilities in China's related industries and conveyed the momentum of industrial upgrading to the entire market.

However, it should be noted that the popularization of new energy vehicles does not mean that fuel vehicles will disappear immediately. For a considerable period, fuel vehicles and new energy vehicles will coexist. But with the continuous innovation and popularization of new energy vehicle technology, it is a foregone conclusion that new energy will replace fuel.

The rise of new energy vehicles has not only changed China's automotive market but also had a profound impact on the global automotive industry. As a generation witnessing history, the era of fuel vehicles that once dominated the automotive market for 200 years is really coming to an end.