In the second half of the year, the electrification trend will continue at an accelerated pace as premium models become available and subsidies recede causing people to purchase vehicles earlier, the team said.

A leading local brokerage has raised their expectations for new energy vehicle (NEV) sales in China this year as the impact of Covid on the supply chain fades and carmakers' capacity ramps up.

CITIC Securities raised its estimate for NEV sales in China to 6 million units in 2022 from 5.5 million, considering the continued release of supply and demand, as well as the sector's continued high boom, analyst Yuan Jiancong's team said in a note today.

As background, China's NEV sales reached 596,000 units in June and production was 590,000 units, both record highs, according to data released Monday by the China Association of Automobile Manufacturers (CAAM).

From January to June, China's NEV production and sales were 2.66 million units and 2.6 million units respectively, both up 120 percent year-on-year, with a market share of 21.6 percent, according to the CAAM.

CITIC Securities believes that the significant boost in China's NEV sales in June was due to the end-of-quarter effect and the release of demand following the easing of the Covid situation.

On the other hand, factors including high oil prices are expected to continue to drive electric vehicle orders to remain high, the team said.

In 2022, the core factor driving growth in China's NEV industry has changed from subsidies to market forces, and the sector has moved from the start-up phase to the growth phase, according to the team.

In the second half of the year, the smart and electric trend will continue to evolve at an accelerated pace as premium models become available and subsidies recede causing people to purchase electric vehicles (EVs) earlier, the team said.

CITIC Securities also mentioned overseas markets in their note, saying that European NEV sales picked up in June, with a slight increase in electrification rates.

In June, eight European countries, including Germany, France, the UK, Italy, Spain, the Netherlands, Sweden and Norway, sold 180,000 EVs, down 9.80 percent year-on-year and up 20.77 percent from May.

In the medium to long term, EV sales in Europe are expected to grow rapidly under the influence of stricter new carbon emission regulations and the resolution to ban the sale of fuel vehicles by 2035.

In the US, the electrification process is expected to accelerate as the policy environment picks up, the team said, adding that they expect US EV sales to reach 3 million and 8 million units by 2025 and 2030, respectively, with penetration rates approaching 20 percent and 50 percent, respectively.

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