Electric vehicle makers in China are worried about the future of their industry, as they expect to face challenges after a successful year due to the withdrawal of government subsidies and the COVID-19 pandemic.

These concerns were raised at the Auto Guangzhou motor show in China, which opened on December 30th. In 2022, China’s EV market is expected to see record sales of 6.5 million units, almost double the 3.52 million units sold in 2021, according to the China Passenger Car Association.

However, overall vehicle sales in China only grew 3.3% in the first 11 months of the year, compared to a forecast of 31% growth for EVs in 2023 and 3% growth for the overall market.

One issue for the EV industry is the global shortage of semiconductors, which are used in EVs. China, the largest EV market in the world, has been affected by supply disruptions caused by COVID-19 and geopolitical tensions with the US.

Another concern for EV makers is the end of government subsidies for EV buyers, which have been gradually phased out since 2020 and are set to end this year.

Without these subsidies, the price of EVs may be too expensive for some consumers. The policy change comes at a time when consumer sentiment has been impacted by outbreaks of COVID-19 and the government’s shift to living with the virus.

It is possible that the government may extend EV incentives to boost the economy and encourage consumption, not just for cars but for the overall market.

The outlook for the EV industry in China is uncertain, but automakers are still optimistic about the future.

For example, GAC Motor, a state-owned automaker based in Guangzhou, expects to see a 10% sales growth in 2023, down from its 12% estimate for this year. However, the company is still confident in the success of its Aion electric sedan, which has been one of the top sellers in China.

Chinese premium EV maker Nio is also optimistic about the future, despite the end of subsidies. Nio’s new ET5 sedan has been a top seller this year with a waiting period of three months for deliveries.

However, the price of the sedan is 328,000 yuan ($50,350) without subsidies, and customers who purchased earlier enjoyed a discount of 11,000 yuan. Despite these challenges, Nio’s CEO, William Li, believes that the company will face intense pressure in the first half of 2023 due to weaker demand following the removal of subsidies.

Despite the uncertainties facing the EV industry in China, the demand for electric vehicles is expected to continue to grow in the country, as the government pushes for a shift towards clean energy.