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Car sales edged up slightly in the first two months of 2025, aided by government subsidies and a growing appetite for electric vehicles (EVs). The world’s largest auto market is experiencing fierce competition, with price wars and evolving consumer preferences reshaping the industry.
Per China Passenger Car Association (CPCA), car sales in the country increased by just 1.3% in the first two months of 2025 compared with the same period last year. While this might seem unimpressive, February saw a strong rebound. Passenger vehicle sales surged 26.1% year over year to 1.41 million units, making up for a weak January, which saw a 12% decline. The drop in January was largely due to the timing of the Lunar New Year holiday, which disrupted production and sales.
One major factor helping the market regain momentum is the government’s aggressive subsidy program. These incentives, offered at both central and local levels, are expected to benefit 15 million vehicles in 2025. Last year, 6.8 million vehicle owners took advantage of similar subsidies, with over 60% choosing to exchange old cars for EVs or plug-in hybrids. This year, with even more funding allocated to support new energy vehicles (NEVs), EV adoption is expected to climb further.
NEV Sales Jump in February, BYD Leads
NEVs, which include battery electric vehicles (BEVs) and plug-in hybrids (PHEVs), made up 48.8% of total car sales in February, jumping 79.7% year over year.
BYD Co Ltd BYDDY continues to dominate the EV market. The company sold 205,711 NEVs in February, up 73.2% from a year earlier, capturing a commanding 29.2% market share.
Geely Automobile GELYY saw massive growth, with NEV sales surging 197.5% to 93,309 units. The company secured the second spot in China’s NEV market with a 13.2% share.
U.S. EV behemoth Tesla TSLA, on the other hand, is struggling to keep up, with just 3.8% market share in China. Its China sales fell to 26,777 units, down 11.2% year over year, as local brands ramp up competition. Tesla’s challenges in China go beyond sales. The company exported only 3,911 China-made EVs in February, an 87.1% drop from last year. In an attempt to stay competitive, Tesla recently updated its autopilot software in China, enabling city navigation. However, with more Chinese automakers offering advanced driving assistance features at no extra cost, Tesla faces an uphill battle.
Xiaomi, a newcomer in the EV space, made a splash by selling 23,728 units last month, nearly matching Tesla’s numbers and securing a 3.4% market share. XPeng and LiAuto captured 4% and 3.7% share, with 30,453 and 26,263 units, respectively.