21:27 01-01-2026

China’s EV market nears a 2026 shakeout amid price wars

China’s EV market eyes a 2026 shakeout as price wars, shrinking incentives and oversupply squeeze margins. Exports surge, but brands like BYD and Li Auto endure

China’s electric-vehicle market could be headed for a major shakeout as soon as 2026. According to South China Morning Post, as many as 50 loss-making EV manufacturers risk scaling back operations or exiting altogether amid waning state support and intensifying price competition.

Exports may be surging—up 87 percent year-on-year in November—but the industry is feeling the strain from overproduction and shrinking margins. New-vehicle deliveries in China are expected to increase by only 5 percent next year, the steepest slowdown since 2020, highlighting how domestic demand is struggling to absorb the wave of supply.

Tax policy is adding another layer of uncertainty. A 10 percent purchase-tax incentive for EVs expires at the end of 2025. From January, that rate will be cut to 5 percent and remain in place through 2028. There is also no decision yet on whether to extend the 20,000-yuan trade-in subsidy.

Relentless price wars have made EVs more affordable for buyers, but they have also battered balance sheets. AlixPartners estimates that, over time, only about 10 percent of Chinese EV makers will stay profitable. Among the more resilient names are BYD, Li Auto, and Seres—companies that appear better positioned to ride out the turbulence while others consolidate or retreat.

As the field narrows, Chinese cars in Russia are likely to be represented by a smaller, financially sturdier roster of brands focused on exports and a long-term foothold in the market.