Chinese EV Giants Face 2026 Reality Check: BYD Soars While Li Auto Stumbles

China's auto market just wrapped up a monster 2025, but the party might be over. After hitting 34.5 million vehicle units shipped (up 10.4% YoY), industry watchers are bracing for a significant cooldown in 2026.

**The 2025 Boom That Masks Coming Headwinds**

Last year, new energy vehicles (NEVs) absolutely dominated, with 16.5 million units sold—a 28% jump from 2024. Battery electric vehicles (BEVs) led the charge, climbing 37.6% to 10.6 million units, while plug-in hybrids (PHEVs) added another 5.8 million. Exports surged too, reaching a record 7.1 million units (+21% YoY), with Chinese automakers finally proving they could compete globally.

But here's the catch: much of this growth came from pent-up demand and policy incentives. The government's full purchase tax exemption for NEVs ended January 1st—buyers now face a 5% tax under a capped 50% reduction. Trade-in subsidies are phasing out. Regulators are also cracking down on the shady practice of registering new cars then flipping them as "used" at massive discounts to clear inventory. These changes alone could slow the market significantly.

**Where the Big Four Stand**

BYD maintained its stranglehold on the market, delivering approximately 4.6 million vehicles in 2025 (up 7.7% YoY), split evenly between BEVs and PHEVs. The company also led exports, shipping 1.05 million units globally—a stunning 140% jump.

NIO delivered 326,028 units last year, up 47% YoY across its three brands (NIO, ONVO, and Firefly). The company's cumulative deliveries crossed 997,000 units, putting it at the doorstep of the million-unit milestone.

XPeng posted the most aggressive growth trajectory, with deliveries up 126% YoY to 429,445 units. Notably, its overseas shipments jumped 96%, reaching 45,008 vehicles as the company expanded into 60 countries by year-end.

Li Auto, meanwhile, took a step back. Deliveries fell 19% YoY to 406,343 units. The company is betting on international expansion through Egypt, Kazakhstan, and Azerbaijan, but domestic headwinds clearly outweighed its global ambitions in 2025.

**2026: The Year Growth Flattens**

Forecasters predict total vehicle sales will barely inch up 1% to 34.8 million units in 2026. NEVs remain the bright spot with projected 15% growth to 19 million units, but that's half the pace of recent years. Passenger vehicle sales are expected to edge up just 0.5%, while commercial vehicles grow 5%. Exports should expand modestly to 7.4 million units (+4%).

The real story isn't what's coming—it's what already happened. China's auto market pulled forward years of demand in 2025. What comes next is anyone's guess, but don't expect a repeat performance.