Survival Mode Activated: How Price Wars and Slumping Sales Are Forcing China’s EV Giants to Fight for 2026

China's electric vehicle market is entering the thunderdome. Forget growth—the new mandate is survival.

The Race to the Bottom

A brutal price war has gutted margins across the board. Manufacturers are slashing tags just to keep metal moving off lots, turning showrooms into financial battlegrounds. It's a classic volume-over-value play, and everyone's bleeding.

Demand Hits a Pothole

Sales aren't just cooling—they're dropping. The initial wave of early adopters has crested, and mainstream buyers are getting cold feet. High interest rates, economic jitters, and charging anxiety are creating the perfect storm for a demand cliff.

The 2026 Reckoning

This sets the stage for a brutal industry shakeout by 2026. The players with the deepest pockets and most efficient operations might limp through. The rest? They'll be consolidation fodder or worse—cautionary tales for MBA students. It's a high-stakes game of musical chairs, and the music is about to stop.

The whole spectacle has a certain grim familiarity to anyone who watched the dot-com bust. Build a moat, they said. Disrupt the industry, they said. Funny how the old rules of economics—like actually turning a profit—always crash the party.

Chinese market gets more crowded as discounts explode

There’s no more room for small talk. The market is now concentrated at the top. Xiao Feng, co-head of China Industrial Research at Citic CLSA, said the top ten makers now hold 95% of the new energy vehicle space, compared to just 60% to 70% a few years ago. And that space includes both hybrids and battery electrics.

Autohome, a local car listing platform, is showing huge markdowns, with 432,000 yuan off the Mercedes-Benz EQS EV and 147,000 yuan sliced off the Volvo XC70.

Paul Gong, who heads China autos research at UBS, said this knife fight isn’t ending soon. “The price war could last for years,” he said.

And just when you think things can’t get worse, Beijing shows up with new tax policies. Purchase tax is coming back. Trade-in subsidies are getting cut. UBS says the EV sales growth rate will likely fall by half next year, from around 20% in 2025.

The market’s stuffed to the brim already. New energy vehicles made up 59.4% of new passenger car sales in November, according to the China Passenger Car Association. That’s a warning light, not a trophy.

Chinese EV makers are pushing overseas as home market turns cold

With fewer buyers at home, China’s EV makers are rushing abroad.Geely, based in Hangzhou, said its electric car exports quadrupled in the first half of the year. It shipped 184,000 vehicles, launched in six new countries, and now has a footprint in around 90 markets.

Geely also opened factories in Egypt, the Middle East, and Indonesia. Right now, it’s second only to BYD in local EV sales.

BYD is stretching out, too. The company exported over 131,000 cars in November, and its Hungary factory is expected to ramp up by 2026.

Tu Le, managing director at Sino Auto, said Chinese companies and battery makers will “firmly stake their claims in Europe.” They’re not stopping at Berlin. They’re eyeing Detroit, too.

Foreign automakers aren’t walking away from China either.

Volkswagen is going all in.It set up joint ventures with Xpeng and Horizon Robotics, and its biggest R&D center outside Germany is now in Hefei, China.

Last month, it confirmed it can now develop and approve cars locally, end to end. That speeds up everything, and the company plans new models for 2026.

In the first three quarters of 2025, Volkswagen delivered 1.9 million cars in China, down 4%, which is less than the 2.4 million it pushed in Western Europe.

Still, it’s not over for the Americans either. “It’s not lost for the U.S. automakers,” said Le. General Motors still pushes nearly 2 million cars a year in China. Both GM and Ford are using China for exports, but Le says only GM is anywhere close to building competitive local models.

But no one’s safe.

“In China, you could be on top one month, and by next quarter, you’re playing catch-up and wonder what happened,” said Le. No one’s crowned yet, and no one is safe.

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