TLDR
- BYD sold merely 83,249 battery electric passenger cars in January, the lowest monthly quantity since February 2024
- China brought back a 5% purchase tax on new energy vehicles starting January 1, putting an end to over a decade of tax exemptions
- Geely has ascended to second place in China’s EV market, having sold over 270,000 vehicles in January
- BYD’s exports decreased to 100,482 vehicles in January from 133,172 in December
- At least six major Chinese EV brands saw significant month-over-month sales declines in January
The world’s largest electric vehicle maker has hit a speed bump. BYD reported its weakest monthly sales of battery electric cars in nearly two years, with 83,249 units sold in January out of a total vehicle sales of 205,518, which includes plug-in hybrids.
China’s EV “miracle” has just hit a wall, and BYD’s January figures are a warning shot.
Production down 29%.
Sales down 30%.
Three times worse than the industry average.Years of fierce price wars have eaten into profits, crushed resale values, and damaged consumer trust. Subsidies…
— Ken Cao-The China Crash Chronicle (@Ken_LoveTW)
The January figure marks the lowest monthly performance since February 2024 when the company sold 121,748 vehicles. The slowdown occurs as China’s electric vehicle market faces increasing pressure from policy changes and intense competition.
Starting January 1, China reimposed a 5% purchase tax on new energy vehicles. This ends more than a decade of exemption from the full 10% vehicle purchase tax. According to Helen Liu, a partner at Bain & Company, this tax change could cause consumers to delay their purchases.
The timing complicates the situation to some extent. China’s economic figures for the first two months usually show volatility because the Lunar New Year holiday falls on different dates each year. Analysts are closely monitoring first-quarter figures to assess the true extent of the slowdown.
Tu Le, founder of consulting firm Sino Auto Insights, said the market will slow down, but the full impact won’t be clear until after the first quarter ends.
Competition Intensifies
Challenges emerge as rivals make progress. Geely has moved into second place in China’s electric car market, selling more than 270,000 vehicles in January. This includes its Galaxy and Zeekr electric brands as well as exported vehicles, with overseas shipments exceeding 60,000 units.
Geely expects overall new energy vehicle sales to reach 2.22 million cars in 2026, a 32% year-over-year increase.
Other competitors saw strong year-over-year growth. Aito, which uses Huawei’s operating system, delivered more than 40,000 vehicles in January, up over 80% from a year earlier. Leapmotor and Nio also saw deliveries rise to 32,059 and 27,182 respectively.
Smartphone maker Xiaomi recorded more than 39,000 electric car deliveries last month. That’s up year over year but down from over 50,000 in December. The company plans to upgrade its SU7 sedan in April.
Not every brand is thriving. Xpeng reported only 20,011 deliveries in January, well below its 2025 monthly average of more than 35,000 vehicles. Li Auto deliveries dropped to 27,668 units.
Le noted that companies like Geely have captured sales in the low end where BYD traditionally dominates. The automaker faces pressure from not just one competitor but several vying for the same market.
Export Figures Decline
The export business also cooled in January. The company shipped 100,482 vehicles overseas, down from 133,172 in December.
BYD told reporters late last month it plans to boost overseas sales by nearly 25% this year to 1.3 million cars. The company has not released a full-year domestic sales target.
Last year, BYD sold a total of 4.56 million new energy vehicles. In the previous year, it overtook to become the world’s largest seller of battery-powered electric cars, delivering 2.26 million units, nearly 28% more than a year earlier.
By mid-2024, new energy vehicles accounted for more than half of all new passenger car sales in China.
Market-Wide Slowdown
The January weakness reflects broader market trends. New energy vehicle sales grew just 2.6% year over year in December, marking a third consecutive month of slowing growth according to China Passenger Car Association data.
The autos sector supports about 30 million jobs in China, more than one-tenth of urban employment. However, Fitch Ratings economist Alex Muscatelli noted that autos accounted for just 3.7% of fixed asset investment last year, compared with 23% for real estate.
Cameron Johnson, senior partner at Tidalwave Solutions, said many in the industry expect Beijing to reintroduce some or all subsidies if the sector worsens further. China’s top leaders are expected to release policy targets at an annual parliamentary meeting in March.
