China’s New Energy Vehicle Sales Trends and the Evolution of Brand Competition (2020–2025)

I. Executive Summary

From 2020 to 2025, China’s new energy vehicle (NEV) market made a structural leap from the margins to the mainstream. Annual NEV passenger car sales rose from 1.109 million units to 12.809 million units, increasing more than tenfold in six years. Penetration climbed from 6.1% in 2020 to about 54% in 2025, and in March 2025 it crossed the 50% threshold for the first time at 51.1%. That milestone marked NEVs’ emergence as the dominant force in China’s passenger car market.

The competitive landscape was fundamentally reshaped. BYD climbed from 16th place in 2020, with 194,000 units, to become the market leader for three consecutive years starting in 2023, reaching 3.529 million units in 2024. At the same time, joint-venture brands entered a broad decline: they held seven of the top ten positions in 2020, but by 2025 domestic brands had taken five of the top ten. Geely Galaxy surged from outside the top 50 in 2023 to second place in 2025 with 1.155 million units. Leapmotor rose from 26th in 2024 to 16th in 2025 with 523,000 units, while Xiaomi Auto reached 412,000 units in its first full year and ranked 19th.

Powertrain dynamics also shifted sharply. Plug-in hybrids, including extended-range vehicles, became the market’s main growth engine. In 2023 and 2024, PHEV sales grew by 82.5% and 75.9%, far outpacing BEV growth of 21.0% and 22.9%. At the same time, the share of BEV owners expressing purchase regret rose from 3% in 2023 to 22% in 2024, with some replacement buyers moving back to internal combustion vehicles or shifting to PHEVs.

Competition is no longer driven primarily by price wars. Survey data suggests that price cuts generated only a 3.6% net boost to purchase decisions, while technology innovation, including advanced driver assistance and ultra-fast charging, delivered a 10.8% net boost, roughly three times as much. Consumers’ initial brand consideration sets averaged only 3.4 brands, reinforcing the market’s growing concentration around a small group of leaders.

Exports have become a second growth engine. In 2025, BYD’s exports jumped 145% year over year to 1.0496 million units, while Chery led the market with 1.344 million export units. Looking ahead, China’s NEV passenger car market is projected to reach 17.69 million units in 2026, with penetration rising to 60.2%.

II. Sales Trends: A Six-Year Leap from Millions to Tens of Millions

2.1 Annual Sales Trajectory

China’s overall passenger car market has entered a low-growth phase, but NEVs remain the only major source of incremental volume. Total passenger car sales rose modestly from 19.29 million to 23.737 million units between 2020 and 2025, implying a compound annual growth rate of roughly 4%. Over the same period, NEV sales expanded from 1.109 million to 12.809 million units, with a compound annual growth rate above 60%.

2.2 Penetration Milestones

China’s NEV passenger car penetration curve follows a classic S-curve. It rose from 6.1% in 2020 to 44.6% in 2024 and then to roughly 54% in 2025, a pace of adoption well ahead of other major global markets. In March 2025, penetration reached 51.1%, up 8.8 percentage points year over year, marking the first time NEVs overtook internal combustion vehicles in a single month and became the market mainstream.

2.3 Signs of Growth Deceleration

Although absolute volumes are still rising, growth is slowing. Year-over-year NEV sales growth fell from 169.2% in 2021 to 17.6% in 2025. The 40.7% growth recorded in 2024 was supported by efficient conversion from a wave of new model launches, while the slower pace in 2025 reflected both a higher comparison base and a more saturated market.

From January to November 2025, narrow passenger vehicle sales grew 6.1% year over year, but the market increasingly showed an “off-season not weak, peak season not strong” pattern. Traditional slow months posted stronger gains, while the usual September-October peak selling season was comparatively muted. This suggests that the seasonality of auto demand is fading as NEV policy support evolves and internal combustion vehicle sales contract further.

III. Powertrain Structure: PHEV Expansion and the BEV Bottleneck

3.1 The Structural Rise of Plug-in Hybrids

The internal powertrain mix of the NEV market is undergoing a major shift. In 2020, battery electric vehicles accounted for 82% of total NEV sales, with 910,000 units versus 201,000 plug-in hybrids. By 2025, the BEV share had fallen to 61.5%, with 7.876 million BEVs versus 4.933 million PHEVs and extended-range vehicles.

The key turning point has been the sustained surge in plug-in hybrid demand:

• 2023: PHEV growth reached 82.5%, versus 21.0% for BEVs, a gap of 61 percentage points

• 2024: PHEV growth reached 75.9%, versus 22.9% for BEVs, a gap of 53 percentage points

• 2025: PHEV growth slowed to single digits, but still made a meaningful contribution to total market growth

Growth in PHEVs and extended-range vehicles has been led by brands such as Li Auto, AITO, and Leapmotor. Their appeal lies in delivering an experience close to that of a BEV while reducing range anxiety.

3.2 The Return Flow from BEVs

A notable signal is the decline in satisfaction among BEV owners. Survey data indicates that the share of BEV owners expressing regret rose sharply from 3% in 2023 to 22% in 2024. In lower-tier cities, poor charging experiences have pushed some replacement buyers back toward internal combustion vehicles or toward PHEVs.

3.3 Charging Infrastructure as a Constraint

By November 2025, China’s EV charging infrastructure had reached 19.322 million units, up 52.0% year over year. Public charging facilities totaled 4.625 million, up 36.0%, while private charging installations reached 14.697 million, up 57.8%. Despite the scale of this buildout, public charging infrastructure is still not expanding fast enough relative to vehicle growth. In third- and fourth-tier cities and county-level markets, charging convenience remains one of the biggest constraints on broader BEV adoption.

IV. Brand Landscape: The Broad Rise of Domestic Brands

4.1 BYD’s Ascent

BYD offers the clearest example of brand ascent in China’s NEV era:

BYD’s leadership has been built not only on scale, but also on its ability to align pricing, technology, and product cadence with the broader shift in market demand.

4.2 The Systemic Decline of Joint Ventures

The transition to NEVs has accelerated the decline of traditional joint-venture leaders:

Joint ventures occupied seven of the top ten spots in 2020, including FAW-Volkswagen, SAIC Volkswagen, Dongfeng Nissan, SAIC GM Buick, Dongfeng Honda, GAC Honda, and FAW Toyota. By 2025, only four joint ventures remained in the top ten, while domestic brands such as BYD, Geely Galaxy, Geely Auto, and Changan had taken up four positions and continued to climb.

4.3 The Startup Ranking Shuffle

Ranking changes among China’s new EV makers were equally dramatic:

Leapmotor and XPeng were the fastest-growing startup brands in 2025, posting growth of 84% and 119%, respectively. Xiaomi Auto moved from partial-year deliveries in 2024 to a full-year delivery run in 2025 and nearly tripled its volume, underlining its strong brand momentum. HIMA, driven by the continued growth of AITO, also solidified its place among the leading new entrants.

4.4 The Geely Group’s Rise

Geely’s multi-brand strategy has produced especially strong results:

• Geely Auto: 5th in 2024 with 853,000 units, and 5th again in 2025 with 925,000 units

• Geely Galaxy: 20th in 2024 with 396,000 units, then 2nd in 2025 with 1.155 million units, implying growth of nearly 200%

Geely Galaxy’s surge was one of the biggest variables reshaping the 2025 brand hierarchy.

V. Competitive Logic: From Price Wars to Technology

5.1 Diminishing Returns from Price Wars

Over the past three years, new model launches have been accompanied by intense price competition, but the payoff from that strategy is weakening:

• Price wars generated only a 3.6% net lift in purchase decisions

• More than 60% of consumers remained neutral and did not accelerate their purchases because of price cuts

• Frequent price adjustments often reinforced wait-and-see behavior rather than triggering faster decisions

5.2 Technology Innovation as the Core Driver

In contrast, technology innovation has had a much stronger effect on demand:

• New technologies such as advanced driver assistance and 800V ultra-fast charging generated a 10.8% net lift in purchase decisions, about three times the effect of price wars

• The 2024-2025 model cycle showed a pattern of technology democratization, with urban NOA and 800V charging moving quickly from premium models into lower price bands

• In the NEV passenger car market above RMB 150,000, LiDAR penetration is expected to rise from 25% in 2024 to 40% in 2025

5.3 Rising Concentration at the Top

Even though roughly 20 new brands entered the market, including Xiaomi, Jiyue, and Yangwang, consumers’ initial brand consideration sets still averaged only 3.4 names. That means many new launches never entered mainstream consumer awareness.

Sales also remained highly concentrated in a handful of breakout models. Vehicles such as the Model Y, Qin PLUS, Song PLUS, and Seagull consistently dominated the charts. In 2024, Model Y and Qin PLUS each sold close to 480,000 units. By contrast, many newly launched models remained stuck in the long tail of the market.

VI. Exports: The Second Growth Curve

6.1 Export Scale and Growth

Export data for major automakers in 2025:

BYD’s 145% growth in exports made it the standout performer. Among the newer EV brands, XPeng and Leapmotor began to scale overseas shipments in the fourth quarter of 2024, and both are expected to reach meaningful export volumes in 2025.

6.2 The Global Market Landscape

Global NEV sales reached 18.236 million units in 2024, up 24.4% year over year. China accounted for 12.888 million of those units, up 35.7%, lifting its share of the global total from 64.8% in 2023 to 70.7%. China is not only the world’s largest NEV market, but also the biggest engine of global export growth in the sector.

Europe’s tariff actions against imported NEVs have introduced short-term volatility, and NEV penetration growth in Europe slowed in 2024. Even so, emerging markets in Southeast Asia and South America still have low penetration rates and substantial long-term upside.

6.3 Export Model Upgrading

Chinese automakers are moving beyond simple vehicle exports toward capacity exports and localization:

• BYD has already started production in Thailand, while projects in Brazil, Hungary, and Indonesia are under construction or in planning

• Leapmotor has secured manufacturing capacity in Poland as part of its localization strategy

• XPeng’s business negotiations with overseas distributors are beginning to convert into results

• Chery is exploring a localized operating model built around China-led innovation, overseas manufacturing, and overseas sales

VII. Outlook and Risk Factors

7.1 Outlook for 2026

SPDB International expects China’s NEV passenger car market to reach 17.69 million units in 2026, up 12% year over year, with penetration rising to 60.2%. That view is based on three main factors:

1. Consumer acceptance of NEVs has risen substantially, with monthly penetration already surpassing 50% in 2025

2. The cost of smart-driving systems and related features is falling rapidly, supporting a stronger demand cycle

3. Trade-in subsidy policies continue to support vehicle replacement demand

In the near term, however, growth in the first half of 2026 may be softer because of changes to vehicle purchase tax policy.

7.2 Risk Factors

1. Vehicle purchase tax changes: Policy adjustments in 2026 could weigh on near-term demand

2. European tariff barriers: Tariffs on imported NEVs add uncertainty to overseas expansion

3. The BEV growth bottleneck: Declining owner satisfaction could limit the pace of BEV adoption

4. Intensifying competition: Price wars are losing effectiveness, but industry shakeout pressure remains high

5. Geopolitical risk: Changes in the macro and political environment could disrupt export plans