BYD sales plunge in first two months of 2026 as EV giant loses more ground to competitors

BYD lost ground to domestic rivals in the first two months of the year as overall demand in China’s electric vehicle market slowed.

The world’s largest electric vehicle manufacturer’s total sales volume in January and February 2026 decreased by approximately 36% compared to the previous year. This figure has been adjusted to account for a slowdown in seasonal sales during the two-week Chinese New Year holiday in mid-February.

Total sales figures for China’s other EV automakers for January and February generally increased. bounce engine and Xiaomi reported significant year-on-year increases in sales during the same period compared to the previous year.

Leapmotor achieved 60,126 sales in January and February this year, an increase of 19% annually. Xiaomi sold more than 59,000 units in the same period, recording a 48% year-on-year increase.

Nio and Geely ZeekrAccording to CNBC’s calculations, combined sales in January and February in particular were up 77% and nearly 84%, respectively, on a year-over-year basis.

In contrast, Xpeng reported the largest year-on-year decline in combined sales, with the automaker’s total deliveries falling nearly 42% from the previous year to 35,267 deliveries. Li Auto’s deliveries also fell nearly 4% to 54,089 sales.

Beyond seasonality, BYD’s declining lead in domestic sales indicates a leveling off in China’s EV playing field, as offerings from rivals become increasingly attractive to consumers.

“BYD’s lead is real but narrowing… A full reversal is unlikely in the near term, but domestic equity compression is the direction of travel,” said Leon Cheng, head of the mobility practice at management consulting firm YCP.

Cheng added that the EV giant has captured about 26-34% of China’s new energy vehicle market in 2024-2025, but other automakers such as Geely and Leapmotor are gaining ground by attacking parts of BYD’s core middle market.

Rival Chinese EV automakers have sought to erode BYD’s dominance by adding as much value as possible to their offerings while maintaining competitive price points; this is a practice known as involution.

Xiaomi’s new YU7 SUV It became China’s best-selling passenger car in January, selling more than twice as many as Tesla’s Model Y cars. The latter was the best-selling model compared to the previous month.

“Last year’s free ‘Eye of God’ [Advanced Driver Assistance System feature] “The launch catalyzed demand volatility without triggering a price war,” he said. A similar move is “expected soon” with the launch of the company’s new “Blade Battery 2.0” and second-generation fast charging Thursday.

Despite a surge in sales volumes from several automakers, the Chinese EV market is grappling with slowing demand, at least partly due to a 5% purchase tax on new energy vehicles after previously being exempt from the full 10% tax.

By reducing incentives for electric vehicle purchases, China’s regulators are signaling a “deliberate normalization” in the country’s electric vehicle market, according to Professor Lawrence Loh of the National University of Singapore Business School.

Such moves are designed to encourage greater self-reliance among Chinese automakers, Loh said.

But analysts say this decline in fiscal stimulus could suppress demand for new EV purchases, as the market always expects costs to be passed on to consumers.

A 5% tax, for example, on a car priced at $200,000… is still like $10,000. [added] Depending on the acquisition cost, that’s something to consider,” said S&P Global Mobility’s Tu.

But Tu added that some automakers are trying to boost the country’s slowing domestic demand by offsetting some of the financial costs on consumers.

Automakers in China have resorted to creative financing schemes to boost consumer demand.

CNBC previously reported that Tesla had begun offering consumers five-year 0% interest loans or seven-year “ultra-low” interest rate loans. According to the official statement, Xiaomi has since announced a similar offer providing seven-year “low-interest financing” deals. Weibo account.