Key Points
- China’s EV and plug-in hybrid sales grew 18% in 2025, accounting for 54% of the market.
- Chinese brands now control nearly two-thirds of the country’s passenger-car market.
- Foreign automakers like VW and GM are closing plants and restructuring their China operations.
- Even Tesla’s sales in China dropped nearly 5% last year.
China’s electric vehicle market shows no signs of slowing. In 2025, Chinese consumers bought nearly 13 million full EVs and plug-in hybrids, which accounted for more than half of all cars sold in the country. This electric revolution has been a significant advantage for local brands like BYD and Geely, which now control nearly two-thirds of the passenger-car market.
While the transition to EVs has stalled in the U.S. and Europe, sales in China grew by a healthy 18% last year. Chinese carmakers have a clear advantage in the “smart” features consumers want, and they are much faster to update their products than their foreign rivals.
This trend is putting immense pressure on international automakers. Many are now rushing to restructure their China operations just to keep a slice of the market. Volkswagen and General Motors have announced plant closures, and GM is taking a $1.1 billion charge related to its China business. Even Tesla, the only foreign brand with a real foothold in the Chinese EV market, saw its sales drop nearly 5% last year.
The competition is brutal. Constant promotions and price cuts have made it tough for anyone to turn a profit. According to one survey, only 30% of car dealers in China were profitable in the first half of 2025.
To maintain momentum, Beijing has been offering generous subsidies to consumers who trade in their old gas-guzzlers for a new electric or plug-in vehicle. Around 11.5 million cars were purchased through this program in 2025.
Some analysts believe that by 2030, the Chinese car market will be almost entirely dominated by local brands, with only a handful of foreign players, such as Tesla, Toyota, and Volkswagen, able to survive. For many other international carmakers, it’s “basically impossible for them to catch up in the EV space,” one analyst said.
