6 Jan 2026 Bloomberg News reports that China's electric vehicle (EV) market is facing a severe crisis. Nearly all manufacturers' earnings have plummeted due to three main factors: reduced government support, soaring battery costs, and price wars.
The report states that shares of Xpeng, which once surged over 130%, have fallen shockingly, and even BYD is struggling under pressure as domestic demand for EVs continues to weaken.
Experts question the outlook for Chinese EV makers in 2026, with consensus answers indicating "less growth than expected."
Starting with weakening domestic demand, forecasts predict a slowdown because EV tax exemptions will be reduced from 2026 onward after several years of tax breaks.
Rising costs follow, especially battery prices affected by geopolitical issues and unavoidable market factors. All brands are competing by cutting prices to boost sales, which reduces individual revenues. Edmond de Rothschild financial institution's fund expects worsening EV sales in Q1 2026. Similarly, Bloomberg Intelligence forecasts China's new energy vehicle growth slowing to 13% in 2026, down from 27% in 2025.
Moreover, manufacturers are responding with tax rebate offers. For instance, Geely Automobile proposes rebates up to 15,000 yuan to offset reduced tax cuts. Some makers are expanding overseas markets to sell EVs at higher prices to compensate for weaker domestic sales. BYD has more than doubled international sales compared to Q3 2024, especially in Europe and Latin America. Geely anticipates overseas sales will grow by 80% in 2026.
Bloomberg also reports Xpeng's shares fell 10% in Hong Kong following continuous losses and weak earnings forecasts.
Leapmotor's stock hit its lowest level since April despite nearly doubling sales, with profits 65% below analyst expectations.
Li Auto and Nio delivered fewer vehicles in Q4 than market estimates. Major players are seeking solutions to reduce profit pressures; for example, Xpeng plans to mass-produce humanoid robots by the end of 2026, while Li Auto aims to transform cars into AI-powered robots.
China's EV market in 2026 is thus highly watchable—one not to blink and miss.