China has aggressively spent billions of yuan to promote EVs, and sales began to boom in 2015. But the government wants the market to be driven by natural consumer demand, so it has reduced subsidies by 20 percent this year and plans to eliminate the payouts entirely by the end of the decade.

Xu Yanhua, a vice secretary for the government-backed China Association of Automobile Manufacturers, told Economic Information Daily that passenger cars would increasingly drive the market for plug-in vehicles and are expected to account for more than 70 percent of demand this year.

"In 2017, demand for long-range pure electric car will rise further, charging facilities will continue to maintain rapid growth momentum, and following an expansion in scale, manufacturing costs will also be further reduced," Xu told the state-run publication.

Last year, sales of EVs and plug-in hybrids jumped more than 50 percent to 507,000 vehicles in China. But automakers missed the original forecast of 700,000 vehicles due to uncertainty over policy supports, according to CAAM.