Subsidies ensure that the factory lines keep churning, but the queue of buyers is getting shorter. The market’s low-hanging fruit has been picked, just as weak labour and property markets have sapped consumer confidence.
With a glut of unsold cars and a dearth of buyers, the industry has resorted to steep discounting to keep shifting stock. The China Automobile Dealers Association estimates that this price war wiped more than 471bn yuan (£50bn) from the carmakers’ revenue in the past three years. The strategy is barely working: BYD’s sales in January were half those a year ago, and previous high-flyer Xpeng reported a third decline.
So what is the future for Chinese EV manufacturers?
Consolidation and creative destruction and product export.
China’s EV exports jumped 70% to 3.43 million vehicles last year
Only 15 of 129 Chinese EV brands are expected to be profitable by 2030
Southeast Asia, Latin America and the Middle East have become key battlegrounds.
The biggest destinations are those with “open and friendly” policies, Yichao Zhang, an automotive partner at AlixPartners, told Rest of World.
In Thailand, Chinese brands have surged from single-digit market share to nearly 20% of passenger-car sales in just four years, challenging long-established Japanese dominance.
Indonesia has entered China’s top export markets after introducing policies that favour locally built EVs.
Mexico and the United Arab Emirates were among the fastest-growing destinations for Chinese EV exports last year, with Mexico selling about 221,000 vehicles and the UAE about 192,000, while factories in Brazil and Argentina underline the push into Latin America.
The United Kingdom has emerged as a relatively open market for Chinese brands.
With no tariffs on Chinese-made EVs and a growing appetite for affordable electric models, Britain has become a key testing ground for Chinese strategies in developed markets.
And Canada will allow 49,000 China EVs into its nation in 2026. That number will grow to 70,000 in a few years.
Exporting has additional costs such as dealer & repair shops. A lower cost Chinese EV has limited value without support.
Tesla: Data published Tuesday by industry lobby group ACEA, or the European Automobile Manufacturers Association, found that Tesla’s new car registrations fell to 8,075 in January, down 17% from a year ago, representing the 13th consecutive month in which sales have shrunk.
BYD: Chinese EV giant BYD continued its rapid growth in Europe at the start of 2026, per the ACEA data. New car registrations for the company rose by 165% year-on-year to 18,242 in January.
BYD also more than doubled its market share across the region, hitting 1.9% last month, up from 0.7% in January 2025. Tariffs have largely kept the company out of the U.S., including a 100% levy on Chinese EVs.