Summary of Key Points
In the first half of 2026, the Chinese new energy vehicle market exhibited a pattern of "divergence while maintaining a stable dominant position": domestic retail sales declined due to shrinking consumption, but explosive growth in exports supported the overall market. The market share of fuel vehicles significantly shrank, with new energy vehicles (especially pure electric ones) taking a strong lead. In terms of corporate landscape, domestic brands and new entrants were at the forefront, while joint-venture brands faced poor performance in fuel vehicle sales and improved results in electric vehicles. There was a clear divergence in technical approaches: premium pure electric models were hot sellers, while entry-level models faced weak demand; plug-in hybrid vehicles relied on exports to maintain growth, and range-extended vehicles saw declines in both wholesale and retail sales. Exports became the core driver, accounting for over 60% of the global market share, but the decline in entry-level vehicle sales raised concerns about the widespread adoption of new energy vehicles.
I. Market Divergence: Fuel Vehicles Falter, New Energy Relys on Exports
The performance of new energy vehicles in the first half of the year was like a seesaw—domestically, sales were sluggish, but internationally, there was strong demand. Data shows that retail sales of new energy passenger vehicles decreased by 14% year-on-year (with fewer purchases by domestic consumers), while wholesale sales increased by 5.1% (most of the vehicles produced were exported).
Fuel vehicles fared even worse, hit by both the decline in new energy vehicle sales and high oil prices, resulting in a nearly complete collapse in domestic sales—joint-venture fuel vehicle sales plummeted by 39%. New energy vehicles managed to stabilize their market share thanks to technological improvements (such as faster charging and longer ranges) and a surge in exports (2.23 million units exported, up 124% year-on-year), effectively shifting unsold domestic vehicles to the international market.
II. Corporate Landscape: Domestic Brands and New Entrants Lead, Joint-Venture Brands Face Divided Success
1. Domestic Brands Take the Lead: BYD sold 397,000 units in June, remaining the market leader; other domestic brands like Geely, Chery, and Leapmotor also made significant progress. "Second-generation" products developed by traditional automakers (such as Jikr and Shenlan) accounted for 18.5% of the market share, up 5.2 percentage points year-on-year.
2. New Entrants Penetrate the Mass Market: New entrants' retail sales grew by 6.5% year-on-year, with 82% being pure electric models. Models priced between 100,000 and 150,000 yuan are becoming more popular—these brands were previously targeting the luxury market but are now expanding into the mainstream consumer segment.
3. Joint-Venture Brands Face a Contrast: While joint-venture new energy vehicle sales increased by 45%, fuel vehicle sales dropped by 39%, indicating that the profits from electric vehicles did not offset losses in fuel vehicles. The penetration of luxury new energy vehicles was fast (about 40%), but overall sales decreased by 30% due to high oil prices and reduced consumer spending on luxury goods.
III. Technical Route Competition: Pure Electric Premiums Boom, Plug-In Hybrids and Range-Extended Vehicles Struggle
The three main technical routes (pure electric, plug-in hybrid, and range-extended) had vastly different outcomes:
1. Pure Electric: The more expensive the model, the better its sales—B-class electric vehicles (such as the Model Y and BYD Song) saw a 37% year-on-year increase in sales, accounting for 30% of the pure electric market share. In contrast, A00-class (microcars) saw a 50% decline in sales, dropping from 20% to 8% of the market share. Domestic consumers prefer more expensive pure electric vehicles, forcing manufacturers to rely on exports to dispose of lower-end models.
2. Plug-In Hybrids: Exports supported these models, with wholesale sales increasing by 4.6% year-on-year, but retail sales decreased by 27.6%. Most plug-in hybrid vehicles were exported, as there was little domestic demand.
3. Range-Extended Vehicles: These models faced a complete downturn, with both wholesale and retail sales declining by 25.2% year-on-year, dropping from 10% to 6.4% of the market share. The reason is simple: cheaper batteries and improved fast-charging technology make pure electric vehicles more competitive, reducing the appeal of range-extended vehicles that require both fuel and charging.
IV. Exports as the Core Driver: Over 60% of Global Market Share
Exports were the highlight of the first half of the year:
1. Record Growth: 499,000 units were exported in June, a 152.7% year-on-year increase, accounting for 56.9% of total passenger vehicle exports. The top three exporters were BYD (171,000 units), Chery (74,000 units), and Geely (62,000 units).
2. Market Structure Improvement: Pure electric vehicles accounted for 58.7% of exports, and plug-in hybrids for 37.7% (up 4.3 percentage points). The CKD (Completely Knocked Down) manufacturing model became popular, with brands like Great Wall and Wuling having a 30% or higher share in this category, which is more cost-effective and locally produced.
3. Global Presence Expansion: From January to May, China's new energy vehicle market share globally rose to 62%, with pure electric vehicles accounting for 58% and plug-in hybrids for 71%. Domestic new energy brands' overseas market share increased from 15.8% to 23.4%, especially in countries like Brazil, Australia, Thailand, and the UK.
V. Concerns about Entry-Level Vehicles: A Hurdle to Widespread Adoption
The China Association of Automobile Manufacturers (CAAM) is most concerned about the decline in sales of entry-level electric vehicles (low-cost microcars and small cars). Wholesale sales of A00-class vehicles dropped by 50% in the first half of the year, reflecting a weak domestic market. This is significant because only the widespread adoption of entry-level vehicles can make new energy more affordable for the general public and drive sustainable industry growth.
However, the current situation (where premium models perform well but entry-level models struggle) raises concerns. The phasing out of subsidies has a significant impact on low-cost vehicles, and consumer purchasing power in rural areas is declining. CAAM calls for the establishment of economic standards for electric vehicles to help manufacturers fill the gap in the entry-level market; otherwise, the widespread adoption of new energy vehicles may be hindered.
Future Prospects
CAAM predicts that domestic passenger vehicle retail sales may decline by 14% in 2026, but Cui Dongshu believes the decline will slow down in the third quarter, with growth expectations possibly increasing by a few percentage points. Exports will continue to drive growth, and the market may gradually recover as consumers become more confident after new national standards are implemented. However, the issue of entry-level vehicles must be addressed promptly.