China EV makers brace for 2026 survival test as global expansion accelerates
Shown here are two Xiaomi electric car models in different colors on November 2, 2025.
Stick Pictures | Light Rocket | Getty Images
BEIJING — China’s electric car boom is ending on a soft note, with sales falling in 2025 and analysts warning a fierce price war will continue.
Not only did he do Tesla’s see your sales 7.4% decrease However, according to data from the China Passenger Automobile Association covering January-November, market leader BYD also reported a decrease of 5.1%.
BYDIn November alone, passenger car sales fell an even higher 26.5% from the previous year, while newer competitors, including vehicles powered by Huawei software and models from Huawei XiaomiOver the same period, over 90% growth was recorded in its sales.
The first trio of Chinese electric car startups listed in the US – Nio, xpeng And Li Auto – despite improvements in monthly deliveries, it was not among the top 10 sellers of the month.
Market concentration increased sharply. According to Xiao Feng, co-chairman of Citic CLSA China Industrial Research, the top ten manufacturers currently account for approximately 95% of the Chinese new energy vehicle market; this proportion increased sharply from 60% to 70% just two or three years ago. New energy vehicles include battery electric and hybrid motor cars.
“While prices are more important than specific brands, I think there will be further industry consolidation,” he said. “Obviously buyers aren’t going to buy a car, [have] I’ve never heard of it.”
The scale of price cuts underscores the pressure. Autohome, an online platform for car sales data in China, even lists vehicles by discount percentage, such as a 432,000 yuan ($61,660) discount on the Mercedes-Benz EQS EV or a 147,000 yuan discount on the Volvo XC70.
Paul Gong, head of China auto research at UBS, expects the price war to continue “for years” while domestic policy changes are likely to weigh on growth next year.
Beijing is getting ready againimpose purchase tax while reducing barter purchasing subsidies, he said. UBS predicts that China’s electric car sales growth rate will roughly halve next year from 20 percent in 2025.
The market is already saturated with the influence of new energy vehicles. 59.4% The number of new passenger cars sold in China in November, according to the China Passenger Car Association.
overseas expansion
Slowing demand at home is pushing Chinese electric car makers to aggressively expand abroad, where profit margins are often higher.
In the first half of the year, Hangzhou-based Geely said: Electric car exports quadrupledIt helped increase total vehicle exports to 184,000. During this time, the company expanded its reach to nearly 90 countries by entering Australia, Vietnam and four other markets. The automaker also opened factories in Egypt, the Middle East and Indonesia.
Geely ranks second after BYD in China’s new energy vehicle sales.
BYD is also expanding its overseas production. New factory in Hungary The company is planned to increase production in 2026. Exported more than 131,000 cars only in November.
Tu Le, founder and chief executive of consultancy Sino Auto Insights, expects more Chinese automakers and battery companies to “firmly stake their claim in Europe” and push the competition closer to the US and Tesla.
Foreign automobile manufacturers
Other foreign auto companies are still eager to gain a share of the Chinese market.
German automobile giant volkswagen Formed local joint ventures with Xpeng and Chinese automotive chip designer Horizon Robotics. Volkswagen’s largest research and development center outside Germany is in Hefei, China, which the automaker said last month it could now build. Complete every step of the vehicle development and approval process first time locally
This capability could help Volkswagen launch cars more quickly in China, with several new models planned for 2026.
Volkswagen delivers in the first three quarters of 2025 more than 17 million The number of vehicles in China increased by 8.5% compared to the previous year, much more than the 8.9 million vehicles it delivered in Western Europe.
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China’s market size continues to be lucrative for foreign businesses. “This is not lost on U.S. automakers,” said Le of Sino Auto Insights.
General Motors still delivers almost 2 million cars are sold annually in China, and like Ford, it also exports cars from the country. “This is where GM is closer than Ford,” he said, stating that if automakers can design vehicles that can compete in China, they can turn this production capacity inward.
Le warned that it may be too early for any automaker, domestic or foreign, to claim victory in the world’s largest auto market.
“But in China you can be on top one month and then the next quarter you catch up and wonder what happened.”
