China’s EV slowdown continues as BYD nears two-year low in sales

BEIJING is a Chinese electric car giant BYD In January, local sales reported a nearly two-year low, signaling growing challenges for the world’s largest auto market.

The decline was fueled by growing concerns about weak domestic demand in China and overproduction of cars flowing to other countries.

At least six major electric car brands Xiaomi until Xpeng According to a CNBC analysis, January reported a sharp decline in sales from December. Some companies only report shipments, not sales, and don’t break even overseas numbers.

“We see increasing pressure on China’s auto market in 2026 from a combination of policy and competitive factors,” said Helen Liu, a partner at Bain & Company. He said policy changes could prompt consumers to delay car purchases, and automakers to be more cautious about new vehicle launches.

China’s economic and business performance in the first two months of the year will be volatile because the Lunar New Year holiday, which follows the agrarian calendar, falls on different dates each year.

But even last January, government support for electric cars was significantly reduced. Starting January 1, China reinstated a 5% purchase tax on new energy vehicles after more than a decade of fully exempting them from a 10% vehicle purchase tax. New energy vehicles include battery and hybrid vehicles.

“We know (auto sales) will slow down, we just don’t know how much,” said Tu Le, founder and managing director of consulting firm Sino Auto Insights. “We’ll know better once the first quarter is over.”

In the case of a price war that has pushed the automakers, the automaker also faces competition from local competitors. offering more features at a lower price.

Aito, whose cars use smartphones and the operating system of telecommunications giant Huawei, announced More than 40 thousand In January, car deliveries increased by more than 80% compared to last year.

Jump engine and Nio There was also an increase in annual deliveries 32,059 and 27 182respectively.

Xiaomi smartphone company has grown over the years 39,000 deliveries produced electric vehicles ahead of schedule in January Upgrade to the SU7 sedan in April. But that was down from more than 50,000 deliveries in December.

“BYD has had a great run at the top level and it’s impressive how long they’ve been able to hold off their domestic rivals,” Le said, noting that it’s not just one but several automakers competing for the same market.

“Companies like Geely with the Xingyuan (Galaxy EV) were really sold at the low end of BYD’s bread and butter,” he added.

There is a Geely rose to second place Behind BYD in China’s electric car market. In January, Geely More than 270 thousand cars were soldincluding the Galaxy and Zeekr electric car brands, with more than 60,000 vehicles exported last month.

The company expects to sell a total of new energy vehicles increased to 2.22 million cars In 2026, it increased by 32%.

BYD, it is sold 4.56 million new energy vehicles last yearhas not yet released a full-year domestic sales plan. Instead, the company told reporters late last month that it plans to increase its overseas sales by 25% this year to 1.3 million vehicles.

The automaker’s exports fell from 133,172 vehicles to 100,482 vehicles in January. December.

Despite the recent headwinds, Le expects BYD to maintain its dominance in domestic and international markets, citing planned upgrades to the company’s charging, energy storage and intelligent driving infrastructure.

Xpeng reported After a year that saw an average of more than 35,000 cars per month, January delivered 20,011 cars. Li Auto deliveries also fell 27,668 carslast month.

The slowdown in sales affects the entire industry. Sales of new energy vehicles, which include hybrid and battery-powered vehicles, rose 2.6% in December, a third month of slowing growth, according to the China Passenger Car Association.

This is a worrying sign for the electric car industry bright spot In an economy struggling to overcome a years-long slump in real estate, once the driver of a quarter of gross domestic product.

If, on top of that prolonged decline in propertyauto sector will continue to deteriorate, many in the industry expect Beijing to restore some or all of the subsidies,” said Cameron Johnson, senior partner in Shanghai at consulting firm Tidalwave Solutions, citing talks with auto parts makers last week. “We’ll have to see how the first quarter goes.”

The The automotive sector contributes to the creation of nearly 30 million jobs in Chinaor more than one-tenth of urban employment, the head of China’s machinery industry body said in November.

However, Fitch Ratings economist Alex Muscatelli said the economic contribution of the auto sector is still small compared to real estate. He said that in fixed capital investment, which shows future growth, cars accounted for only 3.7% of the total last year, while real estate accounted for 23%.

China’s top leaders are expected to announce policy goals for the year at the annual parliamentary session in March.