Although China's new energy vehicle (NEV) sales may slide following government subsidy cuts, the country will remain ahead of other major markets in NEV penetration, said a report from global market research firm Canalys.

The country's sales of NEVs went down 4.7 percent year on year in July, the first decrease in nearly two years. This came after local governments stopped subsidizing purchases of NEVs from June 25 as the country moved to encourage high-quality development of the sector.

Despite the expected slower growth in China, NEV penetration in Europe and the United States will remain far behind China for some time, said Chris Jones, analyst at Canalys.

NEV sales represented 7 percent of all new passenger car sales in China in the second quarter, ahead of other major markets in both sales and penetration.

In contrast, NEVs represented just 3 percent of new car sales in Europe in Q2 and only 2 percent in the United States, according to Canalys.