06 Aug State of China’s Auto Market – July 2025
Written by Bill Russo, Founder & CEO of Automobility Ltd.
Before diving into the latest insights on China’s auto market through May, I’m excited to share the second episode of our “Auto Insider” podcast—a series of candid conversations with industry leaders who are shaping the future of mobility and navigating the fast-evolving transportation landscape.
In this episode, I’m joined by Zhen Wu, President of Magna China, who leads the strategic direction and operational execution of Magna’s business across the country. Since joining Magna in 2010 as Director of Legal Affairs for Asia, Zhen has been instrumental in building the company’s presence in China, leveraging a leadership style that bridges global perspective with local execution. Prior to Magna, she held roles at Bird & Bird in Germany and General Electric (China) Co., Ltd.
🎧 Episode Title: Competing at China Speed: A Tier-1 Perspective from Magna
Our conversation explores what it takes to compete at “China speed” from the vantage point of a global Tier-1 supplier. Zhen shares reflections from her professional journey and offers insights into the unique dynamics of China’s automotive industry—including the accelerating pace of innovation, the value of local partnerships, and how multinational suppliers like Magna are evolving to remain competitive in a market that is rapidly defining the future of global mobility.
And please also have a look at Episodes #1 and #2 of Auto Insider:
👉 Link to Episode #2：Xiaozhi Liu on The Butterfly Effect: China Reshapes the World
👉 Link to Episode #1：Jack Cheng on Smart EVs and the Smart Tier 0.5 Supply Chain
You can stream the Auto Insider podcast on your favorite platform—and don’t forget to like, follow, and subscribe to stay updated on future episodes!
Highlights from 1st Half of 2025
- China’s vehicle shipments surged 11.4% in H1 2025, putting it on track to surpass last year’s volume peak.
- NEVs overtook ICE vehicles in total sales, with 5.47 million units sold—making gasoline cars the new minority.
- BYD led the market with 1.61 million NEVs, while Geely surged into second place with a 124% NEV growth rate.
- MIC exports rose 10.7%, with NEVs now making up 34.4% of total exports—driven by BYD’s 265,000-unit export gain.
- Tesla’s MIC exports plunged 32%, while Mexico remained the top overseas market for Chinese-made vehicles.
- Chinese brands captured 68.5% of the PV market, accounting for all the year-over-year growth as foreign brands declined.
- No legacy global OEMs appear in China’s NEV top 10, underscoring the widening gap as local players dominate the electrification race.
China Auto Shipments Surge: NEVs Drive Record Pace as ICE Sales Slide
Vehicle shipments rose 11.4% in the first half of 2025, with exports ofMade-in-China products rising 10.7%. Combined shipments of passenger and commercial vehicles amounted to 15.7 million units. The China market is on pace to surpass last year’s peak in vehicle shipments.
Shipments of New Energy Vehicles (NEVs) were up 40.3%, equating to an increase of nearly 2 million units from last year’s volume, whereas Internal Combustion Engine (ICE) vehicle shipments declined by 4.3%, a drop of 387,000 units compared to the same period last year.
The passenger vehicle segment are up 13% while commercial vehicle sales are up 2.6% year-over-year. The difference largely reflects strong NEV passenger car demand, extended trade-in subsidies, and aggressive pricing.
BYD Powers MIC Export Boom as Tesla Stumbles and NEVs Hit New Highs
Exports of Made-in-China (MIC) vehicles rose 10.7% year-over-year, with New Energy Vehicle (NEV) exports on track for a record-setting year. NEVs now make up 34.4% of total MIC exports, fueled by BYD’s aggressive global expansion. BYD alone boosted its exports by 265,000 units compared to the same period last year.
Among major MIC exporters, Tesla saw a 32% drop in export volume, marking a sharp contrast with BYD’s surge.
As of May, Mexico remains the top destination for MIC vehicles, with export volumes rising 25% year-over-year. The Middle East, Australia, and the Philippines also posted strong growth.
China’s NEV Market Surpasses ICE—and Legacy Foreign Brands Are Absent
Domestic vehicle sales rose my more than 10% in H1 2025, driven by the extension of vehicle replacement subsidies and aggressive pricing tactics.
A historic milestone has been reached: New Energy Vehicles (NEVs) outsold gasoline-powered internal combustion engine (ICE) vehicles in the first half of 2025. Based on long-term trends, this shift appears permanent—gasoline-powered passenger cars have now moved into the minority position in China’s auto market.
In the first half of 2025, BYD led the NEV market with 1.61 million units sold, capturing a commanding 29.4% share. Geely Group secured the second position with 680,000 units, highlighting its rapid rise in the segment. Market concentration is intensifying, with the top 10 NEV manufacturers accounting for nearly 80% of total sales, and the top five alone representing over 60%.
In fact, five of the top six NEV manufacturers—BYD, Geely, SAIC, Chang’an, and Chery—are legacy Chinese automakers that have successfully transitioned from ICE to electric. Their dominance underscores a key strategic advantage: the ability to leverage profits from their traditional businesses to fund the shift to electric mobility. Among Smart EV startups, Huawei-backed HIMA affiliates posted a strong June performance with 53,000 units sold, pushing them ahead of Li Auto and Leap Motor in year-to-date sales.
The New Energy Vehicle (NEV) passenger car segment has officially overtaken the Internal Combustion Engine (ICE) segment in size, with 5.47 million units sold in H1 2025, surpassing the 5.43 million units sold in the ICE segment. What’s more striking than the volume is the composition of market leadership: the NEV top 10 is entirely dominated by Chinese brands, with no traditional multinational OEMs represented—a stark contrast to the ICE top 10, where legacy global players like Volkswagen (22%), Toyota (13%), Honda (8%), and Benz (6%) hold substantial shares.
This shift highlights a critical strategic failure by foreign automakers to deliver competitively priced, well-configured NEVs tailored to the Chinese market. As a result, Chinese brands now dominate, led by BYD (29%), Geely (13%), and SAIC (7%).
Meanwhile, the few foreign players that do compete in NEVs—such as Tesla (5%)—are being increasingly outpaced, and others like Volkswagen, Toyota, and Honda are absent from the leaderboard entirely. This marks a profound turning point in the competitive landscape, as foreign brands that once dominated the ICE era are now losing relevance in the age of electrification.
The data also signals a broader structural change: more than 4 out of 5 NEVs sold are locally branded, and Chinese automakers are now firmly in control of the future of mobility in their home market. Without rapid adaptation, multinational OEMs risk further marginalization in the world’s largest auto market.
Chinese Brands Dominate as Geely Surges Past VW
In the first half of 2025, Chinese brands captured a commanding 68.5% share of the passenger vehicle (PV) market, up from just 36% in 2020—a staggering 33-point gain in five years. All year-over-year growth in the market came from local OEMs, whose shipments surged 25% to 9.27 million units. In stark contrast, foreign brands continue to retreat, with German, Japanese, and American automakers all posting declines of 6–10%. Global OEMs now account for just 31% of the market, reflecting an accelerating power shift toward homegrown players in the world’s largest auto market.
In the first half of 2025, BYD, VW, and Geely emerged as the top three automakers by total passenger vehicle sales, though with dramatically different powertrain strategies. BYD dominated with 1.61 million NEVs sold and zero reliance on ICE vehicles, while VW leaned heavily on ICE (96% of its sales mix) and Geely demonstrated strong dual-lane growth, with NEV sales surging 124% and ICE up 19%. Toyota stands out among global brands as a rare bright spot, growing across both ICE and NEV segments. Meanwhile, legacy global players like Honda, BMW, and Benz posted steep year-over-year declines, especially in NEVs. Overall, the market grew 9.7%, driven entirely by a 33.3% surge in NEV sales, while ICE volumes declined 6.9%.
Join us on Thursday, July 17 at 9am China time for the monthly AmCham Shanghai for regular State of China Auto Market Monthly Webinar, where we will review the latest market results through the first half of 2025 and highlight recent news from the world’s largest and most progressive automotive market.
Webinar | State of China Auto Market Monthly Briefing (July)
AUTOMOBILITY MEDIA
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Auto Insider Podcast: Episodes #1 and #2:
👉 Link to Episode #2：Xiaozhi Liu on The Butterfly Effect: China Reshapes the World
👉 Link to Episode #1：Jack Cheng on Smart EVs and the Smart Tier 0.5 Supply Chain
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Xiaomi’s New SUV Gets 289,000 Orders in an Hour
Bloomberg, June 27
Xiaomi’s New SUV Gets 289,000 Orders in an Hour [VIDEO]
Bill Russo, Founder and CEO of Automobility, shares his analysis of China’s EV sector on Insight with Haslinda Amin. Russo speaks after Xiaomi Corp.’s shares rose 8% to a lifetime high in the wake of strong initial orders for its $35,000 sport utility vehicle, the YU7.
Source: https://www.bloomberg.com/news/videos/2025-06-27/xiaomi-s-new-suv-gets-289-000-orders-in-an-hour-video
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Global automakers need to “Flip the Script” or face elimination CNBC, June 12
Bill Russo CEO of Automobility Ltd was interviewed by Sri Jegarajah on CNBC’s The China Connection
In segment 1, Bill said that China has built dominance in EV batteries, core electronics, and integration of full stack hardware and software solutions. He added that global automakers need to incentivize Chinese companies to invest globally, so they can take advantage of China’s economies of scale. He also addressed the structural problems in China’s market, including oversupply and aggressive price cuts.
In segment 2, he talked about the market forces in the global EV market, and explained why he believes BYD will be the first Chinese company to emerge as a truly global automaker.
Global automakers must “Flip the Script” or face elimination
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Things just keep getting more difficult in China for Elon Musk’s Tesla
Business Insider, June 27
That threat goes beyond pricing and performance, according to Bill Russo, CEO of Shanghai-based consultancy Automobility.
“They’re not just an EV company,” he told Bloomberg TV. “They’re creating a fully integrated digital ecosystem, value proposition, which, in China, the world’s biggest digital economy, resonates very, very well.”
Russo said Xiaomi is applying a “smartphone mindset” to vehicles — treating cars as digital terminals within a broader network of connected devices.
With more than 600 million Xiaomi-branded smart devices in use globally, that ecosystem advantage could drive deeper customer loyalty than traditional automakers can muster.
Not everyone is convinced Tesla can keep its edge. Russo noted that while Tesla led on software innovation, it lacks the localized integration that increasingly matters in China.
“Tesla, as a software pioneer, you get consideration,” he said. “But quite frankly, they don’t have the digital ecosystem localized in the way the Chinese consumer wants them.”
SOURCE: https://www.businessinsider.com/tesla-faces-new-rival-xiaomi-challenges-model-y-china-market-2025-6
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Chinese battery giant and Tesla supplier CATL is expanding globally: Here’s why it matters
CNBC, June 27
Bill Russo, founder and CEO of investment advisory firm Automobility, said CATL’s expansion plans appear designed to sustain its global leadership and scale, citing limited growth momentum in its domestic market and rising competition.
“CATL’s early mover advantage helps lock in long-term contracts, and pricing power is stronger in Europe, supporting higher margins compared to China,” Russo told CNBC by email.
“The Hungary plant is a strategic gateway into the EU market,” he added. “Hungary offers proximity to major OEMs, government incentives, and lower labor costs — making it an attractive hub for Chinese EV and battery players seeking a foothold in Europe,” he added.
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Inside the EV Revolution: Bill Russo Talks Intelligent Connected Vehicles
Bill Russo delivered a keynote address at the 2025 Global Electric Vehicle & Mobility Conference, hosted by BNP Paribas in Hong Kong in May 2025. He also participated in a sideline interview, where he shared insights on Intelligent Connected Vehicles.
Inside the EV Revolution: Bill Russo Talks Intelligent Connected Vehicles
Source: https://www.bloomberg.com/news/videos/2025-04-24/automobility-s-russo-on-tariff-impacts-video
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Understanding China’s Internet of Mobility Revolution with Bill Russo
Host Wenchi Yu speaks with Bill Russo, an auto industry expert with a lifelong career in Detroit and China (Chrysler), about China’s rapid rise to become the world leader in automobile manufacturing, sales, and exports, as well as the global leader in new energy vehicles, batteries, and the “internet of mobility.”
EP16 Beyond EVs: Understanding China’s Internet of Mobility Revolution with Bill Russo
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Porsche slashes outlook as US tariffs, China slump dim prospects [Reuters]
Bill Russo, CEO of Shanghai-based advisory firm Automobility, said Chinese customers of electric cars had been drawn to domestic brands because of their improved technological offering.
“No foreign company believed that the Chinese could somehow build equity that was superior to the foreign brands, especially the Europeans.”
Full article: https://www.reuters.com/business/autos-transportation/porsche-cuts-full-year-sales-outlook-2025-04-28/
If your organization would like a custom briefing on the State of China’s Auto Market, please reach out to us at info@automobility.io
About Bill Russo
Bill is a contributing author to the book Selling to China: Stories of Success, Failure, and Constant Change (2023), where he describes how China has become the most commercially innovative place to do business in the world’s auto industry – and why those hoping to compete globally must continue to be in the market.
About Automobility
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