(Bloomberg) -- Sales of cleaner cars in China plunged in January as consumers dialed back purchases during the Lunar New Year holiday and others got in earlier in December before electric vehicle subsidies fell away.

A total of 332,000 new-energy vehicles, including pure electric cars and plug-in hybrids, were sold last month, down 48.3% from the month prior and 6.3% lower than sales in January 2022, according to final data released by the China Passenger Car Association Wednesday.

Chinese automaker BYD Co. and US manufacturer Tesla Inc. led the pack, shipping 151,341 and 66,051 cars, respectively. Some 26,843 China-made Tesla Model 3 sedans and Model Y SUVs were delivered to local customers, while 39,208 were exported. Momentum picked up for Tesla in January after another round of aggressive price cuts. The EV pioneer was forced to cut output in December from its Shanghai factory amid muted demand.

China’s Lunar New Year holiday was always going to be an extraordinary one this year, being the first since 2020 where people were able to travel freely and return to their hometowns without having to worry about Covid-related movement restrictions. As a result, many production lines were halted for longer than usual and few dealerships remained open.

The scrapping of a national subsidy on EV purchases at the end of 2022 also encouraged customers to place orders in the fourth quarter. Sales of Xpeng Inc., Nio Inc., and Zhejiang Leapmotor Technologies Ltd. all witnessed drops in January.

Nio CEO William Li said in December that sales may be challenging in the first half after the subsidy cut and because of China’s broader economic slowdown.

“With the end of Covid, the advantages of public transportation have resurfaced, rendering more choices for consumers,” PCA Secretary General Cui Dongshu said.

Overall, passenger car sales in China slumped 38% year-on-year in January to 1.29 million, the PCA data showed. That was down 40% from December and the lowest since at least April last year, when China was in the throes of Covid lockdowns.

Cui also called for more incentives for relatively low-emission gasoline cars to boost the consumption among middle-to-low income earners, who were most affected by China’s punishing Covid outbreaks. 

This would help create a “balance between economic effectiveness and environmental protection,” he said, noting that passenger cars in China have now reached their carbon emissions peak, 12 years ahead of expectations.

The PCA also said in its report that the resumption of production after the Lunar New Year had been relatively slow this year with some “middle-aged or senior migrant workers considering staying in their hometowns.”

--With assistance from James Mayger.

(Updates with PCA comment on carbon emissions in 10th paragraph.)

©2023 Bloomberg L.P.