China’s EV Market Intensifies as Price Wars and Sales Declines Reshape Competitive Landscape
China's electric vehicle sector is entering a brutal consolidation phase. Established players Tesla and BYD reported year-on-year sales declines of 7.4% and 5.1% respectively in 2025, with BYD's November collapse of 26.5% signaling deepening troubles. Meanwhile, tech-backed entrants from Huawei and Xiaomi are surging with 90%+ growth rates, rewriting the competitive playbook.
The market's concentration has reached extreme levels—the top ten manufacturers now control 95% of China's NEV market, up from 60-70% just years ago, according to Citic CLSA's Xiao Feng. Discounts have turned desperate, with Autohome listing a Mercedes-Benz EQS EV discounted by 432,000 yuan and Volvo XC70 marked down 147,000 yuan. UBS's Paul Gong warns the bloodletting may continue for years.
New tax policies from Beijing threaten further pain. The return of purchase taxes and trade-in restrictions could accelerate the shakeout, leaving weaker players stranded. This is no longer an industry where participation guarantees success—it's becoming a kill zone where only the capital-rich and operationally efficient will survive.
