Chinese EV makers push overseas as local sales slow

Chinese EV makers are facing increased investor anxiety after a weak earnings season, with concerns mounting over 2026 as government support wanes and costs rise.

Shares in Xpeng dropped 10% in Hong Kong after reporting continued losses and weak guidance, while Leapmotor’s profit missed analyst estimates despite higher sales.

Li Auto and Nio also issued Q4 forecasts that fell short of market expectations, pointing to sluggish demand as the year ends.

Analysts expect China’s new energy vehicle growth to slow to 13% next year, down from 27% in 2025, partly due to expiring tax breaks.

Manufacturers like BYD, Geely, and Leapmotor, which focus on cheaper models, are seen as better positioned for the expected market downturn.

Some firms, including BYD and Geely, are expanding overseas to offset domestic challenges, while others look to new technology such as robotics for growth.

🔗 Source: Bloomberg

🧠 Food for thought

Implications, context, and why it matters.

China’s 2026 New Energy Vehicle (NEV) purchase tax cut halves relief and squeezes premium margins

On Jan 1 2026 China’s NEV purchase tax break falls to 50% with a 15000 yuan cap from 30000 1. Pricier cars hit the cap and face higher bills while cheaper models take a bigger % hit 2. The 15000 yuan loss (about 2100 USD) may prompt premium brands to offset it with price moves.
Buyers are pulling purchases forward to get the full break, with dealers seeing orders up 60% vs normal months 1. Q4 2025 may look strong then Q1 2026 could drop as the cut lands.

Third-party suppliers enabling Chinese Original Equipment Manufacturer (OEM) exports can gain as domestic growth slows to 13% in 2026

Chinese automakers are adding plants in Spain; Hungary; Turkey; Brazil; Thailand 3. This creates demand for vehicle homologation (certification to meet local safety plus regulatory standards); software localization for foreign markets (adapting language plus services plus content); data compliance with regional rules; and charging infrastructure interoperability (ensuring vehicles can connect to bill with local charging networks).
China shipped about 5.5 million vehicles in 2024; 2025 could top 7 million 3. China holds over 75% of raw and refined battery minerals; four of the top five battery makers are Chinese. From Jan 2026 exporters need licenses to ship finished vehicles abroad 3. Suppliers that handle certification, charging links, and digital cockpit updates (in-car infotainment plus control software) for local language plus rules can win work as exports grow.