Chinese EV stocks under pressure as sales momentum slows

The overall Chinese EV market slowdown

The Chinese EV market is currently experiencing its slowest sales growth in 18 months, according to the China Passenger Car Association (CPCA). In August 2025, sales of new energy vehicles (NEVs), which include EVs and hybrids, grew by just 7.5% year-on-year.

This is a significant decrease from the 12% growth seen in July 2025 and is the smallest gain since February 2024. This EV sector slowdown is happening alongside China’s overall car market. Total passenger car retail sales grew by just 4.9% in August 2025, the slowest growth in seven months.

The reason behind slowing momentum

The slowdown in the market is tied to both the economy and government actions. A long-lasting property market crisis and rising debt make Chinese consumers spend less, directly affecting big purchases like cars. This cautious spending behavior is a key reason why even deep discounts are not fully boosting sales.

The government has also changed its approach. While national EV purchase subsidies ended in 2022, tax breaks for new energy vehicles have been extended until 2027. The focus has shifted from simple sales growth to encouraging innovation and preventing destructive competition, a significant factor in the current market’s instability.

The price war’s impact on EV brands

The price war has severely impacted EV companies’ profits. The average price of a new energy vehicle in China dropped by 5.8% in the first quarter of 2025 compared to the previous year. This has pushed some companies to the brink.

According to the China Association of Automobile Manufacturers (CAAM), the average net profit margin for Chinese automakers fell to just 3.9% in the first three months of 2025. This intense competition is what the government’s new policies are trying to control, as they see it as a threat to the health of the entire industry.

How government policies are shifting

In response to the ruthless competition, the Chinese government is focusing on stabilizing the EV market. On July 30, 2025, the Politburo, led by President Xi Jinping, called for “self-discipline” to stop a type of competition that ruins the industry, “involution.”

The State Council, China’s main governing body, ordered 17 automakers to pay their suppliers within 60 days to ease financial pressure. However, a report from August showed that only three of these companies—all state-owned—had followed the rule.

BYD’s sales target cut and slowdown

Due to the slowing market and competition, BYD, the largest EV maker in China, has cut its sales target 2025 by as much as 16% to 4.6 million vehicles. This is a significant move that shows even the most significant player is feeling the effects of the market.

This new goal would mean BYD’s slowest growth in five years. BYD’s production dipped for two consecutive months, and domestic sales fell for four straight months through August, Reuters reports.

BYD’s falling domestic sales

As BYD’s growth slows down, it’s struggling to meet its original targets. BYD’s progress toward its initial target lagged by late summer, while Geely posted notable gains in mainstream segments.

This is an essential part of BYD’s business, and its decline is a big reason for the overall slowdown. At the same time, some of BYD’s rivals, like Geely, are doing better. Geely’s sales in the same economy car group increased by 90% in July.

Li Auto’s decline in demand

Like BYD, Li Auto, a company known for its extended-range hybrid vehicles, faces problems. The demand for its cars is getting weaker. In August, Li Auto’s sales were down for the third month compared to last year. This is happening because the market for extended-range hybrids isn’t doing well right now.

Sales for this type of vehicle only increased by 0.3% in August after an 11.4% drop in July, underscoring soft demand for range-extenders. Li Auto is also dealing with tougher competition as other EV makers are cutting prices on their full-electric cars, making them a more popular choice for buyers.

Li Auto’s revenue decline in Q2 2025

Its financial reports clearly show the weakening demand for Li Auto’s vehicles. The company’s vehicle sales in the second quarter of 2025 were RMB 28.9 billion, a 4.7% decrease from the same time in 2024. This shows how the sales slowdown is directly affecting the company’s income.

Li Auto’s total revenue decreased by 4.5% to RMB 30.2 billion. Even with fewer sales, the company’s gross profit stayed almost the same, only dropping by 1.8%. This suggests Li Auto manages its costs well, even when facing harsh sales conditions.

Nio’s positive sales momentum

While many companies are struggling, Nio has been doing great recently. August was the best month ever for Nio’s EV and hybrid sales. The company delivered 31,305 vehicles in August 2025, a big jump from the 21,017 vehicles it delivered in July.

Nio’s financial reports also show good news. Its total revenue in the second quarter of 2025 was RMB 19,008.7 million, a 9.0% increase from last year. The company’s gross profit also increased by 12.4%, showing it is doing much better than some of its rivals.

Xpeng’s record-breaking deliveries

Another Chinese EV company that is doing well is Xpeng. In the first quarter of 2025, Xpeng delivered 94,008 vehicles, which is the most it has ever delivered in a single quarter. This number is a massive 330.8% increase compared to the same time in 2024.

This strong performance made Xpeng the top-selling new EV company. Xpeng’s success proves that some brands are still finding ways to grow and do well, even when the overall market is having problems.

Geely’s strong sales growth

Compared to BYD, Geely is a big competitor, performing exceptionally well. In August, Geely’s sales of electric and hybrid vehicles jumped by a massive 95.2% compared to the same month last year.

This considerable increase shows that Geely is quickly gaining on its rivals and taking a bigger market share. Geely is also very confident about the future. The company has raised its 2025 sales goal to 3 million vehicles, up from its old target of 2.71 million. This is the opposite of what BYD is doing.

BYD’s past dominance and growth

While Geely is rising, people can’t forget how dominant BYD has been. In 2024, BYD was the clear leader of the Chinese EV market. The company sold a record 4.27 million vehicles, a masmassive 41.3% increase from the previous year.

They also made over 4 million cars in 2024, with 1.7 million being all-electric and 2.5 million being hybrids.BYD’s outstanding sales and production numbers in 2024 helped it get a significant 18% share of the global EV market. Their two best-selling car series, the Ocean and Dynasty, sold over 3.5 million units together.

Chinese EVs global export challenges

As Chinese EV companies look for new places to sell their cars, they face problems in other countries. In Europe, for example, Chinese EV brands are not as popular with customers, and the European Union has started to put new taxes on them.

This has caused the value of Chinese EV exports to Europe to drop. Because of these challenges, Chinese EV makers are sending more cars to other places like Mexico, Southeast Asia, and Russia. In 2024, Chinese car automakers shifted more exports toward Mexico 2024, though estimates vary and precise growth rates aren’t consistent across sources.

China’s dominance in battery technology

A big reason for China’s strong position in the EV world is its control over battery technology. China is a leader in making EV batteries, with Chinese companies aproducing over three-quarters of batteries sold globally in 2024. This gives them a significant advantage because the battery is a massive part of the cost of an electric car.

Chinese companies and research groups are also leading in the creation of new battery technologies. For instance, Chinese institutions are responsible for 65.4% of the most important research papers on electric batteries, while U.S. institutions only have 11.9%.

China’s dominance in battery technology

The Chinese EV market has changed significantly over the past few years, showing how quickly things can shift. In 2024, plug-in electric vehicles made up 47.9% of all car sales in China, a considerable jump from just 6.3% in 2020.

This rapid growth shows that Chinese customers have quickly bought new energy vehicles. Now, the market is expected to keep changing. While sales of hybrids might stay weak, the demand for full-electric cars should stay strong. As battery costs get lower and more charging stations are built, more people will likely choose to buy them.

Want to know how global pressures are shaking automakers? Read more about China’s competition and how US tariffs drag down Mercedes’ earnings.

The latest on Chinese EV sector

The Chinese EV sector is now a mix of good and bad news. Some companies like BYD and Li Auto are under pressure from slowing sales and have had to lower their goals. But others, like Nio, Xpeng, and Geely, are still showing strong growth.

The fierce price war and people being careful with their money are the main reasons for the market’s slowdown. The government also plays a bigger part by making the market more stable and focusing on new ideas instead of just sales.

Curious about what’s behind the latest EV surprise? Dive into another curveball from China raises eyebrows over EV numbers.

What’s your take on China’s EV shift—boom or bust? Drop your comments below.

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This slideshow was made with AI assistance and human editing.