China’s EV Sales Are Sharply Declining: There Are Just Three Profitable Automakers

Preliminary data from the China Automobile Association showed that 1.04 million electric and plug-in hybrid cars were sold nationwide in June. The number of vehicles sold is huge, but it is still a drop of 7 percent. The figures for the first half of the year are even worse, with a 13 percent drop to 4.73 million vehicles compared to 2025. 

Why did it happen? Many buyers are waiting for price cuts, and government support for electric vehicles continues to shrink. As the South China Morning Post writes, Beijing adjusted its subsidy policy earlier this year and began phasing out tax breaks for electric vehicle manufacturers. It has also been confirmed that annual tax credits for electric, plug-in and extended-range hybrid vehicles, as well as hydrogen fuel cell commercial vehicles, will be reduced from 1 January 2027.

Currently, BYD, Xiaomi and Leapmotor are the only three Chinese electric vehicle manufacturers that are profitable. With profitability increasingly difficult to achieve, car companies are focusing more on foreign markets. Analysts believe Chinese brands could end 2026 with exports of roughly 10 million vehicles, a significant jump of 41 percent from the previous year.

• Also See: Due To Declining Demand In China, BMW Intends To Further Cut Costs