BYD Datang. Photo by Larry Evans
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It’s been a popular topic lately to write about China’s EV sales slump in 2026, growing EV exports from China, and various policy changes and even controversies related to that. But there’s much more going on that isn’t typically acknowledged.
First of all, note that while China’s EV sales are down considerably in 2026 — from 7,188,923 looking at all plugin vehicle sales from January through May 2025 to 3,715,993 looking at January through May 2026 — it’s actually the whole Chinese auto market that’s down. For that same period of time, plugin vehicles dropped only slightly from 54% of the Chinese auto market to 52% of the Chinese auto market. Full electrics (BEVs) actually rose from 33% in 2025 to 34% in 2026. Just looking at the month of May, plugin vehicles soared to a record 63% of the Chinese auto market, up from 53% in May 2025. So, the broader story is really that Chinese new vehicle sales are down. China’s overall economy is in a tough period, and it’s dragging down auto sales.
Another thing to note: the Chinese EV market saw super hyper fast EV sales growth over the past several years. It was just growing, growing, growing, booming, booming, booming. Last year, trying to sustain that growth, auto companies got themselves into a price war. We covered this several times. Executives from top Chinese auto companies warned it wasn’t sustainable, that it was getting out of hand. The Chinese government stepped in a couple of times to try to calm things down and stop the trend, reportedly even holding meetings with top auto executives. Without EV sales growth, each company was trying to get their numbers by undercutting the others, but that was killing profits, and the warnings to stop the price war didn’t go far enough.
