China’s NEV slowdown ‘signals structural transition in global auto industry’

The recent deceleration in China’s New Energy Vehicle (NEV) market marks more than a temporary pause—it signals a structural transition with consequences far beyond its borders, according to GlobalData analysts.

As the anchor of global electrification, China’s shift is already reshaping growth trajectories, competitive dynamics, and technology priorities across the automotive industry. For an industry accustomed to China acting as a growth engine, this reversal is a sobering inflection point, says GlobalData, a leading intelligence and productivity platform.

GlobalData’s latest monthly assessment of the global electrified vehicle market illustrates the scale of the impact. China’s slowdown has pulled global battery electric vehicle (BEV) growth below 20%, dropping to around 17% in November 2025 after averaging roughly 30% over the prior three months in 2025.

Madhuchhanda Palit, Senior Automotive Analyst at GlobalData, comments: “Several forces converge behind this change. The first is policy normalization. China’s 15th Five-Year Plan (2026–2030) removes NEVs from the list of strategic industries, signaling a deliberate retreat from broad-based EV support in favor of consolidation and higher-value technological priorities such as artificial intelligence (AI), quantum computing, and 6G. The intent is clear: reduce overcapacity, curb market fragmentation, and allow weaker players to exit while stronger domestic champions advance on technology rather than price.”

Market saturation compounds the policy shift. By late 2025, NEVs accounted for a significant percentage of new car sales in China, indicating that early adopters—typically urban, affluent, and tech-forward—have largely been served. The next phase, penetrating smaller cities and rural markets, is proving harder due to charging infrastructure gaps and acute price sensitivity. This has fueled intense domestic price wars, eroding profitability. Authorities have increasingly intervened to discourage what they describe as “rat-race competition,” where vehicles are sold below cost, destabilizing the sector.

Palit continues: “The implications extend globally. As domestic demand cools, Chinese manufacturers have pushed aggressively into overseas markets to maintain scale. This export drive has prompted protectionist responses, including steep tariffs in the EU, the US, and Canada, complicating growth strategies. Given that China represents more than half of global EV sales, its growth rate halving—from roughly 27% in 2025 to about 13% in 2026—inevitably drags down global momentum.”

Manufacturers worldwide are also recalibrating product strategies. With BEV growth slowing, hybrids are increasingly positioned as a pragmatic bridge technology, balancing emissions reduction with cost, infrastructure realities, and consumer confidence. Several global automakers are already pivoting in this direction, prioritizing hybrids over aggressive BEV expansion.

Palit concludes: “Smaller and lesser-known brands are likely to be squeezed out as consumers gravitate toward familiar, trusted names. As the EV transition slows, internal combustion engines (ICE) will remain dominant on roads for longer, prolonging elevated emissions and air pollution levels. The challenge of making EVs viable for mass-market buyers—particularly in smaller cities—remains unresolved, constrained by infrastructure limitations and geopolitical tensions. China’s slowdown, therefore, is not an endpoint, but a reset—one that forces the global automotive industry to rethink pace, priorities, and pathways to electrification.”

“China’s NEV slowdown ‘signals structural transition in global auto industry’” was originally created and published by Just Auto, a GlobalData owned brand.

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