The recovery of China's electric vehicle (EV) sector is likely to have picked up in June, spurred by pent-up demand after months of lacklustre sales, potentially setting some start-ups back on the path to profitability.
Competition remains fierce, and underachieving companies could find themselves forced out of business, analysts warned.
According to the China Passenger Car Association (CPCA), about 670,000 pure electric and plug-in hybrid vehicles will have been handed to customers by the end of this month, up 15.5 per cent from May and 26 per cent from a year ago.
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The projected sales numbers add to evidence that the EV market is back on the fast track after it fell victim to weak consumer demand between January and April.
"More young customers came to buy their long-coveted electric cars," said Zhao Zhen, a sales director with Shanghai-based dealer Wan Zhuo Auto. "They are increasingly keen on EVs with intelligent features such as autonomous driving systems and AR [augmented reality] technology."
A price war broke out in the mainland's automotive market during the first four months of this year as builders of both EVs and petrol cars looked to attract consumers worried about the economy and their income. Dozens of carmakers slashed their prices by as much as 40 per cent to retain their market share.
But the heavy discounts failed to drive up sales because budget-conscious consumers held back, believing even deeper price cuts might be on the way.
Many Chinese motorists who had been waiting on the sidelines in the expectation of further price cuts had now decided to enter the market as they felt the party was over, a research note by Citic Securities said.
Bull Wang, research manager at IDC China, said preliminary self-driving technology has become an increasingly important part of a premium vehicle in China, and this had boosted car sales recently.
In the first quarter of this year, 45.3 per cent of the cars priced between 200,000 yuan (US$27,607) and 400,000 yuan were fitted with self-driving systems on par with level 2 (L2) automation, he added.
L2 provides assistance to the driver but requires active supervision.
"Digital cockpit technologies also enable drivers and passengers to better interact with the machines, expanding the functions of a smart car," Wang said.