Electromobility China's Electric Car Manufacturers Back on Growth Track

After a weak start to the year, the market for electric cars in China is picking up again. Established manufacturers dominate, start-ups sharpen new strategies.

The Chinese market for electric cars recovered significantly in March, after experiencing a significant drop in the first two months of the year. Sales of New Energy Vehicles (NEVs), mainly electric cars and plug-in hybrids, rose to 1.13 million units. This represents an increase of 56 percent compared to the weak February (in the wholesale market).

These preliminary data from the Passenger Car Association (CCA) show that the weakness at the beginning of the year was only temporary. In March, almost every second new car sold in China was an NEV. Their market penetration climbed to over 47 percent.

Since January 1, 2026, NEV buyers in China have had to pay a purchase tax of five percent for the first time. Many customers, therefore, brought their purchases forward to December 2025 while the tax exemption was still in effect. The Chinese New Year festival, which fell in mid-February this year, further enhanced this early-year drop.

Market Recovers – BYD Too

Now the market is normalizing again: BYD remains unchallenged at the top. The electric car and battery company from Shenzhen, which only builds NEVs, sold almost 300,000 passenger cars in March, more than twice as many as the second-placed Geely Group (127,300 units).

Analysis

China Speed is Not Just a Matter of Labor Costs

Strategically, BYD is noticeably shifting its focus away from merely maximizing sales figures towards long-term investments in charging infrastructure. The company has established 5,000 of its own FLASH fast-charging stations and plans to quadruple this number to 20,000 by the end of the year. Together with the second generation of its in-house Blade Battery, an ecosystem of vehicles, battery technology, and charging network is to be created.

Tesla ranked third in March with over 85,000 vehicles and remains the only foreign car manufacturer playing in this league.

Leapmotor is the Best-Selling Startup

Sales of pure electric car startups in China have also recovered significantly in the third month of the year. Leapmotor, supported by the European Stellantis Group, sold 50,000 vehicles in March, an increase of 35 percent year-over-year.

This makes Leapmotor the best-selling startup among Chinese electric car manufacturers. At the same time, the company is now operating in the black, something previously only achieved by Li Auto in this cohort of "new forces."

In 2025, Leapmotor reported its first annual profit with nearly 600,000 cars sold, according to specialist publication CNEVPOST. Notably, Leapmotor is consistently implementing a strategy of vertical integration. The company announced that 65 percent of vehicle costs are attributed to self-developed components.

Technology Focus is Well Received

In addition, a strong focus on technology resonates well with Chinese customers. The new entry-level model A10 has attracted attention since its launch at the end of March, in the price range equivalent to 13,000 euros (approx. USD 15,300). During the last weekend of March, it recorded more than 9,000 firm orders within a few days.

Leapmotor has also recently opened its first development center outside China in Munich. The design center in the Schwabing-Freimann district oversees future new models and works closely with the studios in Hangzhou and Shanghai.

Li Auto delivered 41,000 units in March, securing second place among startups. After setbacks with its fully electric models, the company has refocused on its strengths—plug-in hybrids with extended range and family-friendly SUVs.

Li Auto and Nio Increase Sales

After resolving production bottlenecks following the New Year festival, sales of the "LI i6" model exceeded the 24,000 mark in March, Li Xiang, founder and CEO of Li Auto, was quoted in media reports. In the price range equivalent to 26,000 to 39,000 euros, the Li i6 is among the best-selling all-electric SUVs in China.

Nio reported 35,500 deliveries for March, an increase of 136 percent year-over-year. In the first quarter, Nio sold a total of over 80,000 vehicles, nearly twice as many as in the same period last year.

The manufacturer from Shanghai pursues a multi-brand strategy: In addition to the premium core brand, the volume brand Onvo serves the mid-market. The new entry-level brand Firefly is intended for the lower price segment.

Current Trends

In March, Xiaomi surpassed the 20,000 monthly deliveries mark for the first time, a milestone closely watched by analysts in China. With three models currently in production scaling, the company is trying to apply the quick product cycles and aggressive marketing from the consumer electronics world to car manufacturing.

From the current numbers and strategies, two major trends can be discerned. Firstly, there is the trend that electrification in China continues unabated. If anything, there is expected to be a temporary acceleration of this trend due to the crisis in the Strait of Hormuz.

Secondly, there is increasing pressure on manufacturers to develop clear strategic profiles. Not only are sales of electric cars and hybrids growing, but competition is also intensifying.

The companies' responses vary: BYD is building the ecosystem described above. Leapmotor is focusing on radical cost minimization in the mass market. Nio is investing steadfastly and long-term in technology and battery swapping. Xiaomi is trying to apply familiar methods from the consumer electronics segment.

While China's economy, in general, is growing somewhat more slowly than in the boom phase of the early days, the e-mobility market is becoming more mature and the competition is tougher than ever.