- China’s EV sales are expected to slow from 2026 as reduced incentives weaken demand and reshape consumer behaviour.
- Experts warn that China’s EV sales will slow from 2026, stressing how tax cuts and subsidies continue to influence market stability.
Electric vehicle (EV) sales in China have expanded rapidly in recent years, and EVs now account for nearly half of all new cars sold in the country. However, the market still reacts sharply to shifts in government policy. Incentives continue to influence consumer decisions, and even modest adjustments can prompt significant shifts in sales patterns.
At the start of 2025, sales dropped sharply. Yet they recovered as the year progressed. Lower prices contributed to this rebound, and buyers rushed to secure vehicles before the incentives changed. Consequently, the Economist Intelligence Unit (EIU) raised its outlook for 2025 while lowering its expectations for 2026 and 2027.
In September 2025, new energy vehicle (NEV) sales increased by 15.5% year-over-year. They reached around 1.3 million units and pushed total passenger-car sales up by 6.6%, according to the China Passenger Car Association (CPCA).
Moreover, NEV sales from January to September increased by approximately 24% compared to the same period in 2024. They reached a total of 8.9 million units. Because of this strong performance, the EIU now expects full-year 2025 NEV sales to reach 13.8 million units, a 22% increase. Buyers are likely to maintain this momentum in the final quarter. They want to benefit from incentives that will soon fall.
Currently, qualifying NEVs are exempt from the 10% vehicle purchase tax, which is capped at RMB 30,000 (approximately US$4,217). However, the government will cut this benefit to RMB 15,000 for NEVs bought in 2026 and 2027.
Additionally, the national trade-in scheme offers up to RMB 20,000 for scrapping an older internal combustion engine (ICE) vehicle. This programme will end in December 2025 unless the authorities extend it. Several provinces have already halted the scheme due to shrinking budgets, and demand has weakened in those regions.
Due to these changes, the market is expected to slow in 2026. A surge in late-2025 purchases and reduced support will weigh on buyer behaviour. As a result, the EIU will reduce its NEV growth forecasts for 2026 and 2027 to 14% and 3%, respectively. Earlier estimates stood at 16% and 5%. These revisions lower China’s five-year compound annual growth rate for NEV sales from 12% to 8%.
Meanwhile, the global automotive sector is bracing for a difficult 2026. Trade tensions, shifting tariffs, and regulatory uncertainty are reshaping the EV landscape. Automakers now need to rethink production strategies. They must adjust pricing models and redefine market priorities.
Although EVs remain the fastest-growing segment worldwide, protectionist policies and supply-chain adjustments will continue to challenge profitability across major regions.