China’s EV exports surge as domestic sales slow to 3-year low

China’s car market slowed to its weakest pace in three years in 2025, even as exports of made-in-China vehicles beat expectations, highlighting the country’s strategic pivot to overseas growth.

According to the China Passenger Car Association (CPCA), total car sales dropped 14.5% in December from a year earlier to 2.28 million units—the sharpest monthly decline since February 2024. Full-year sales edged up just 3.9%, down from 5.3% in 2024.

EVs overtake petrol cars

For the first time, electric vehicles (EVs) and plug-in hybrids (PHEV) outsold gasoline cars in China. However, their growth slowed sharply, rising 17.6% from 40.7% the previous year, as government subsidies for trade-ins dried up across many cities. This reduction intensified the already fierce competition among domestic automakers.

Companies like Changan (000625.SZ), Li Auto (2015.HK), and Nio (9866.HK) fell short of their 2025 sales targets. Even BYD (002594.SZ), China’s top automaker, reported its weakest growth in five years, narrowly meeting its revised goal of 4.6 million vehicles.

Exports Drive Hope

The silver lining came from international markets. Overall car exports jumped 19.4% to 5.79 million units, while EV and PHEV exports soared 86.2% to 2.42 million units, surpassing expectations and dethroning Tesla (TSLA.O) as the world’s largest EV seller. BYD led the charge, shipping over 1 million vehicles overseas.

Analysts say the shift underscores Chinese automakers’ focus on global expansion to offset a cooling domestic market. “Exports have become a lifeline for automakers struggling with local demand,” said an industry observer.

Looking Ahead

With domestic demand fading, experts predict that overseas markets will play a decisive role in China’s auto industry growth strategy in 2026, offering investors and stakeholders a critical area to monitor.

Read more on As China sales slide, can India save German carmakers?