BEIJING: China’s auto sales rose 18.7% in February from a year earlier, continuing last month’s uptick that snapped eight consecutive months of decline, industry data showed on Friday.

Overall sales in the world’s biggest car market rose to 1.74 million vehicles in February, data from the China Association of Automobile Manufacturers (CAAM) showed.

Sales of new energy vehicles (NEV), which include battery-powered electric vehicles, plug-in petrol-electric hybrids and hydrogen fuel-cell vehicles, increased 197.5% to 368,000 units in February from a year earlier.

But they fell 18.6% from January, during the Lunar New Year holiday, when most stores are shut and consumers typically delay purchases.

NEV sales this year have also been hit by China’s move in January to slash subsidies by 30%. NEV sales in January had fallen 18.6% from December, when sales surged ahead of the subsidy cuts kicking in.

China has ambitious goals in promoting NEVs in it effort to curb air pollution but believes the industry has matured enough to be driven by demand rather than subsidies.

“We remain cautiously optimistic about the future development of the industry,” Chen Shihua, deputy secretary general of CAAM, said on Friday. “Affected by the current conflict between Russia and Ukraine, the external environment of the industry is more complicated.”

“In addition, factors such as the chip shortage and rising raw material costs still affect the production and operation of enterprises,” Chen said.

The development of NEVs is facing increased uncertainty, especially due to a shortage of lithium that is used to make batteries, another industry body, China Passenger Car Association (CPCA), said earlier this week.

Prices of lithium, nickel and other raw materials key to the NEV supply chain have surged and are expected to rise further as supplies are disrupted due to Russia’s invasion of Ukraine.

American EV makers Rivian warned on Thursday that it could cut its planned production in half this year due to supply chain issues.

The auto industry has also long been facing a global shortage of chips that are used in everything from brake sensors to power steerings, leading to production cuts that are hurting sales.

On Tuesday, data from CPCA showed that Tesla Inc, the world’s largest EV maker, sold 56,515 China-made vehicles in February, including 33,315 for export.

Tesla is the only foreign automaker among the top 10 best selling NEV brands in China, where local brands such as Nio and Alibaba-backed Xpeng Inc compete fiercely.