After the penetration rate first exceeds 60%, the A00-class market faces pressure. Experts: Priority should be given to developing economical electric vehicles, to boost the expansion of the automobile market.

The latest data from the China Passenger Car Association shows that in April, the retail penetration rate of new energy vehicles (NEVs) in the domestic passenger car market was 61.4%, surpassing 60% for the first time, a 9.7 percentage point increase compared to the same period last year, and a 9.6 percentage point increase month-on-month. However, behind this record high, there is a continued decline in the A00 class market, which once served as a core force in the automotive industry.

“China should emulate markets like Europe and Japan by vigorously developing ‘economical electric vehicles’.” According to Cui Dongshu, Secretary General of the China Passenger Car Association, to continuously expand the overall car market, it is necessary to focus on developing economical pure electric vehicles such as the A00 class. These models are low-cost and have low usage thresholds, making them key carriers for penetrating lower-tier markets and attracting new users. “Currently, the popularity of electric vehicles in county and township markets is lagging, mainly due to the lack of clear standards for economical electric vehicles, resulting in low compliance of low-priced, practical commuting models. This not only fails to meet people’s livelihood needs but also makes it difficult to activate the vitality of lower-tier markets.”

Data from the China Passenger Car Association shows that in April, the A00 and A0 class economical electric vehicles faced significant market pressure. Among them, wholesale sales of A00 class vehicles were 70k units, down 55% year-on-year, but up 7% month-on-month, accounting for 9% of the pure electric market, a 12.3 percentage point decrease from the same period last year; wholesale sales of A0 class vehicles were 210k units, accounting for 27% of the pure electric market, a 1.7 percentage point increase; A-class electric vehicles sold 217k units, accounting for 28% of the pure electric market, a 3.7 percentage point increase. In the first quarter of this year, A00 class new energy vehicles experienced the most significant decline, with total sales of only 76k units, down 68.5% year-on-year.

Data from the China Association of Automobile Manufacturers (CAAM) also confirms this trend. According to CAAM, from January to April, sales of A00 and A-class new energy passenger vehicles declined. Currently, sales are mainly concentrated in the B-class segment, with a total of 70k units sold, up 12.3% year-on-year. In terms of price segments, from January to April, sales of new energy passenger vehicles mainly ranged from 100,000 to 150k yuan, with a total of 895k units sold, up 12% year-on-year.

“A00 class new energy passenger vehicles are undergoing adjustments, heavily influenced by policy shifts, and the decline in the first quarter has also impacted the overall new energy vehicle market,” said Chen Shihua, Deputy Secretary General of CAAM. Due to the high baseline of A00 class vehicles in the past, this nearly 70% drop has contributed to a 40% slowdown in the growth rate of overall new energy vehicles.

The so-called “policy adjustment” refers to the change starting January 1, 2026, where the purchase tax policy for new energy vehicles shifts from “exemption” to “half reduction.” Consumers will pay a tax rate of 5% of the vehicle’s sale price, with a maximum tax reduction of 15k yuan per vehicle. Additionally, the tiered implementation of vehicle replacement subsidies will begin in 2026. These policy adjustments have, to some extent, suppressed market demand for economical new energy vehicles.

Notably, in April, exports of new energy passenger vehicles reached 406k units, a year-on-year increase of 111.8%, and an 18.3% increase month-on-month, accounting for 52.7% of passenger vehicle exports, an 8 percentage point increase from the same period last year. Among these, pure electric vehicles accounted for 57.2% of NEV exports, with A00 and A0 class pure electric vehicles making up 51.2% of pure electric exports (compared to 46% last year).

“From the global automotive industry development trend, economical electric vehicles have already occupied an important strategic position,” Cui Dongshu believes. Currently, economical electric vehicles have become the mainstream of global commuting models. With their economical, convenient, and practical features, they meet the livelihood needs of many countries and regions. Launching unified standards is key to adapting to domestic aging populations, county and township markets, and industry pain points like market sluggishness. It is also an important move to connect with international markets, promote automotive industry upgrades, and cultivate domestic brands for overseas expansion. “In the long-term adoption trend, growth in economical electric vehicles is the most promising. Only widespread adoption of economical electric vehicles can truly drive sustainable market growth.”

(Article source: Caixin)