16 Oct State of China’s Auto Market – September 2025
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Written by Bill Russo, Founder & CEO of Automobility Ltd.
China’s auto market extended its growth streak into August, with shipments maintaining double-digit gains driven by strong New Energy Vehicle (NEV) demand and record export volumes. Government trade-in subsidies and aggressive pricing continue to underpin domestic momentum, while Chinese automakers accelerate their global expansion as tariffs and recycling fees drive “glocalization.” Importantly, China’s efforts to curb “involution” in the industry have so far had little impact on sales. We believe this is because intense price competition, while compressing margins, is also making vehicles more affordable, expanding the addressable market, and fueling the rapid shift toward NEVs. As a result, the market has crossed a historic threshold, with NEVs outselling ICE passenger vehicles, foreign brands losing share, and local leaders like BYD, Geely, HIMA, and Xiaomi setting the pace.
In a recent interview with Deutsche Welle, I discussed the ongoing EV price war in China and the government’s recent comments on curbing “involution.” I emphasized that while such statements may signal concern, they are unlikely to fundamentally alter the competitive dynamics of the market, where affordability and rapid NEV adoption continue to drive momentum.
Key Headlines Summary through August 2025
- China remains on track to surpass the 2024 peak shipments, with ~20% of Made-in-China vehicles exported and ~64% of those still ICE powered.
- NEV shipments +36.7% YoY (+2.6M units), lifting penetration +8.0 percentage points versus 2024; NEVs now represent nearly half of domestic sales.
- Exports +13.8% YoY (+519k units), with August hitting a record 611k units; momentum led by Mexico, Australia, the Philippines, and Middle East markets.
- NEVs have outsold ICE passenger vehicles through August 2025, and the lead continues to widen.
- Chinese brands at 68.8% domestic PV share, capturing all YoY growth as foreign brands have lost one-third of their share since 2020.
- Tesla remains stagnant, with Giga Shanghai exports at all-time lows and its aging lineup unable to keep pace with local rivals.
- Smart EV competition reshuffles the leaderboard: HIMA and Xiaomi rise to the top ranks, while Li Auto slips from the monthly top 10.
- From exports to “glocalization”: Chinese OEMs accelerate overseas manufacturing projects as tariffs and recycling fees force localization strategies.
NOTE: Glocalization refers to the shift by Chinese automakers from relying heavily on exports to establishing localized production and supply chains overseas. Rather than just shipping cars abroad, companies are building factories, KD assembly plants, and full-function operations in key markets such as Thailand, Brazil, Hungary, Turkey, and Mexico.
This shift is driven by tariffs, recycling fees, and other trade barriers, which make it more costly to simply export from China. By producing locally, Chinese OEMs can avoid tariff penalties, align products with local regulations, create jobs in host countries, and strengthen brand acceptance, all while maintaining global scale.
NEVs and Exports Drive China’s 2025 Surge
Vehicle shipments rose 12.6% through August 2025, with Made-in-China exports up 13.8% (+519,000 units). Total passenger and commercial vehicle shipments reached 21.1 million units, keeping the market on track to surpass the 2024 record peak.
New Energy Vehicle (NEV) shipments surged 36.7%, adding roughly 2.6 million units compared with the same period in 2024. In contrast, Internal Combustion Engine (ICE) shipments fell 1.9%, a decline of about 220,000 units year-on-year.
August shipments rebounded to 2.86 million units, up from July’s 2.59 million, with both passenger and commercial vehicles posting strong year-over-year gains. The market has now delivered sustained double-digit growth through the first eight months of 2025, powered by surging NEV demand and record exports of Made-in-China vehicles. Extended trade-in subsidies and aggressive pricing by local automakers continue to reinforce passenger vehicle momentum.
NEVs Power Record Made-in-China Export Growth
Exports of Made-in-China (MIC) vehicles remain at record highs, with August setting a new monthly peak of 611,000 units. Export volumes rose 13.8% year-to-date through August (+519,000 units), with New Energy Vehicle (NEV) exports already surpassing the full-year 2024 total. NEVs now account for 35.7% of all MIC exports, driven by BYD’s aggressive global expansion. BYD alone added 364,000 incremental NEV exports versus last year and represents about 41% of all MIC NEV exports.
Mexico remains the top destination for MIC vehicles, with shipments rising 19% year-over-year. The UAE, Australia, and the Philippines posted especially strong growth, while Kazakhstan surged 98% to break into the top 10 export destinations. Russia, by contrast, fell sharply due to steep recycling fees acting as tariffs—underscoring both the opportunities and risks as China’s automakers expand into global markets.
BEV Growth Outpaces PHEVs in China’s Production Mix
China’s NEV ex-factory shipments reached 9.62 million units through August 2025, a total that already includes 1.53 million vehicles exported overseas. NEVs now account for over 45% of all vehicle shipments, underscoring the segment’s central role in driving market growth. While battery electric vehicles (BEVs) continue to expand rapidly, the absolute share of plug-in hybrids (PHEVs) has declined, with their mix slipping below 35% of NEV production in August. We believe this signals a maturing market where consumers are shifting more decisively toward BEVs as charging infrastructure improves and cost competitiveness strengthens.
While absolute PHEV shipments have risen 22.8% year-to-date, their share of overall NEV production has slipped steadily below 35% in recent months, down from over 44% in July 2024. This signals that the momentum behind PHEVs may be dissipating, raising concerns for companies that have heavily invested in sustaining hybrid volumes as part of their China strategy. The shift reflects a maturing market where consumers are increasingly favoring BEVs as infrastructure and affordability improve. That said, PHEVs may continue to play an important role in overseas markets, where limited charging networks make hybrids a more practical transitional solution.
NEVs Seize the Majority in China
Domestic vehicle sales rose 12.3% through August, driven entirely by the surge in NEV demand, which climbed 30.1% year-on-year. By contrast, ICE sales slipped slightly, underscoring how growth in the Chinese market is now almost exclusively powered by electrification. This marks an historic tipping point: NEVs are no longer a niche segment but the backbone of domestic sales momentum. With subsidies and aggressive pricing still fueling adoption, automakers are prioritizing scale and market share, even as traditional vehicles continue to lose ground. Looking ahead, this positions China to set the global pace for the transition to electrified mobility, with lessons that other markets will soon confront as EV adoption accelerates.
Amidst intensifying competition, the market has reached a decisive tipping point: New Energy Vehicles (NEVs) have not only overtaken gasoline-powered internal combustion engine (ICE) vehicles in 2025 but are steadily widening their lead. Through August, NEVs accounted for 51% of passenger vehicle sales, climbing as high as 55% in the latest monthly results. This confirms that ICE cars have entered a lasting minority position in China’s auto market, with electrification now firmly established as the dominant trajectory.
While BYD’s growth has slowed in 2025, they remain the undisputed leader of China’s NEV market, holding nearly 30% share and commanding 6 of the 10 best-selling nameplates. The market overall remains fragmented, yet the top six players control over 64% share and the top ten nearly 79%. Chinese brands dominate this landscape—with Tesla as the lone foreign exception, and its sales declining 6.9% so far this year.
Notably, the five largest Chinese NEV players all began as ICE automakers, demonstrating that legacy carmakers can successfully pivot into electrification. Startups may eventually rise further in the future, but for now they comprise only about one-third of the market, proving that incumbents can remain highly relevant in the NEV era.
In 2025, the NEV passenger vehicle market has firmly overtaken ICE, with 7.56 million NEVs sold versus 7.19 million ICE vehicles through August. The NEV market is highly concentrated, with BYD commanding 29% share, followed by Geely (12%) and SAIC (7%).
Meanwhile, Li Auto’s position has weakened as they face intensifying competition in the Smart EV category—compounded by slowing momentum in the PHEV segment, which they once dominated but where rivals are now closing in. By contrast, the ICE market remains led by global legacy players such as VW (22%) and Toyota (13%), though Chinese brands like Geely, Chery, and Chang’an have risen as competitive challengers.
Local OEMs Reshape the Rankings: BYD Leads, Geely Surges
Foreign automakers continue to lose ground in China’s passenger vehicle market, ceding 33 percentage points of share since 2020. Through August 2025, local brands accounted for 68.8% of shipments, nearly double their share of just five years ago, and they are responsible for all of the market’s year-over-year growth. In contrast, foreign brands remain in steep decline: German OEMs fell 6.2% year-on-year, Japanese brands dropped 5.0%, and U.S. automakers slipped 1.1%. The data underscore a structural power shift, with Chinese automakers consolidating dominance while global OEMs struggle to maintain relevance in the world’s largest car market.
BYD has cemented its lead as China’s top passenger vehicle group in 2025, with 2.19 million units sold (14.9% share), driven entirely by its dominant NEV lineup. Volkswagen remains second at 1.67 million (11.3%), though its NEV volumes continue to lag, while Geely has surged to 1.64 million (11.1%) on the strength of a balanced ICE/NEV portfolio, posting 62% YoY growth. Toyota follows at 1.01 million (6.9%), the only global carmaker showing consistent growth, and Chang’an (914k, 6.2%) rounds out the top five. Chery (860k) and SAIC (863k) remain in the second tier, each posting solid NEV gains. Tesla, with 361k units (2.5%), is the only foreign brand with meaningful NEV presence but has slipped with a 6.9% decline. Overall, domestic brands are widening their dominance, accounting for all market growth as foreign OEMs face stagnation or decline.
Conclusion
China’s auto market in 2025 has reached a decisive turning point. NEVs have cemented a majority of passenger vehicle sales, local brands now command nearly 70% share, and exports are hitting record highs while pushing into global “glocalization.” Intense neijuan competition fuels rapid innovation but squeezes margins, as scale and speed outweigh short-term profits. The balance of power has shifted: Chinese automakers are setting the global pace, while foreign brands struggle to keep relevance in the world’s most dynamic auto market.
Join us on Thursday, October 23 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 September 2025 and highlight recent news from the world’s largest and most progressive automotive market.
Webinar | State of China Auto Market Monthly Briefing (October)
AUTOMOBILITY NEWS
We are pleased to share that Bill Russo, Founder & CEO of Automobility Ltd., has been appointed to the Strategic Council of CoMotion Global, which will convene its inaugural global event in Riyadh, Saudi Arabia on December 7–9, 2025. This appointment reflects Bill’s ongoing role in shaping the dialogue around the future of mobility, as China’s transformation increasingly impacts global markets. You can read the full press release:
AUTOMOBILITY ARTICLES
New Report: Intelligent Driving – A Look at the China Landscape
We are pleased to share with you the report titled Intelligent Driving: A Look at the China Landscape, which provides a comprehensive look at the rapidly evolving ADAS/AV landscape in China.
China has emerged as the global epicenter for advanced vehicle technology innovation—not only in batteries and EVs, but increasingly in Intelligent Connected Vehicles (ICVs) and next-generation ADAS/Intelligent Driving systems.
This report highlights:
- The Three Waves of Automobility Disruption
- Intelligent Driving Beyond ADAS
- Collaboration Models
- Profiles of Key Players in China
Implications for the Industry
The move toward intelligent driving in China is redefining vehicle architectures, business models, and user expectations. Companies that can balance scale with innovation—while building collaborative ecosystems—will set the pace for global competitiveness in the decade ahead.
This work was prepared by Automobility Ltd. in collaboration with Sense Media, organizers of the AutoSens & InCabin China event, taking place November 18–20, 2025, in Hefei. If you are interested in learning more about this event, please contact us.
To access the full Sense Media ADAS Guide, which includes profiles of leading global companies, please scan the below QR code:
China’s Auto Supply Chain Revolution: A Strategic Playbook for Global Auto Players
🚗⚡️ China is no longer just the world’s largest auto market — it’s the hub shaping the future of mobility.
Our latest article, “China’s Auto Supply Chain Revolution: A Strategic Playbook for Global Auto Players,” explores how the industry is splitting into three worlds by 2030 — and why what happens in China will not stay in China.
Through case studies of Autoliv, Magna, and Aptiv, we highlight how leading suppliers are embedding in China’s innovation ecosystem and leveraging partnerships to stay globally competitive.
🌏 For global suppliers, the message is clear: China is no longer optional. The winners of the next decade will innovate from China, scale with China, and export alongside China.
AUTO INSIDER PODCAST
Auto Insider Podcast: Episodes #1,#2 and #3
🎙️ Catch Up on the First 3 Episodes of the Auto Insider Podcast hosted by Bill Russo. Insights from the front lines of China’s mobility transformation — where speed, scale, and strategy are redefining global competition.
🚗 Episode #3: Competing at China Speed: A Tier-1 Perspective from Magna with Zhen Wu, President of Magna China
🦋 Episode #2: The Butterfly Effect—How China’s Auto Shift is Reshaping the World with Dr. Xiaozhi Liu, Founder and CEO of ASL Automotive, Former CEO of Fuyao Glass
🔧 Episode #1: Smart EVs and the Smart Tier 0.5 Supply Chain with Jack Cheng , Co-Founder of NIO and CEO of M-Mobility
We’re just getting started — more conversations coming soon with the visionaries shaping the future of mobility.
AUTOMOBILITY MEDIA
Building the Chinese EV Global Footprint
CNBC, August 29
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Bill Russo joined CNBC International to discuss China’s EV sector and BYD’s earnings preview on August 29.
Key themes covered:
⚡ China’s EV makers are no longer just exporters — they are building global supply chains and localized ecosystemsto support their international growth.
📉 Price competition in the domestic market is reshaping margins and accelerating the push overseas.
🌍 Europe is emerging as the frontline of competition, with Chinese brands investing in factories and partnerships to gain footholds.
🔋 Supply chains for batteries, software, and electronics are becoming as important as vehicle exports themselves. The transformation of China’s auto industry is not about “if” but “how fast” it globalizes.
Shifting Dynamics of the Global Auto Industry
Bloomberg Adria, August 27
🎙️ Bill Russo joined Bloomberg Adria on August 27 to discuss the shifting dynamics of the global auto industry.
Key points discussed in the full interview included:
🚗 Xiaomi’s bold EV entry – how they achieved what Apple could not, and why their digital-first approach is resonating.
🌍 Global expansion strategies – Xiaomi’s Europe plans, the barriers in the U.S., and how Chinese brands are positioning against Tesla and BYD.
⚡ China’s EV market outlook – the government’s role in stabilizing margins after years of price wars and what’s next for growth.
🔮 The future of mobility – how software, ecosystems, and global trade tensions are shaping the industry’s trajectory.
📺 This is a short clip from the full interview aired on August 27, 2025
SOURCE: https://www.youtube.com/watch?v=vQnmM_p1_3o
Why Can’t the U.S. Build 5-Minute E.V. Chargers?
New York Times, August 19
Bill Russo was quoted in the New York Times on why China is pulling ahead of the U.S. in the race to deploy ultra-fast ⚡️ E.V. charging:
The article underscores how China’s head start is not just about technology, but about infrastructure strategy:
🏗️ In China, E.V. charging is treated as critical national infrastructure, with direct integration to high-voltage grids enabling megawatt charging hubs to be built quickly.
🐢 In the U.S., local utility delays and policy reversals slow down progress.
💡 China’s big advantage came from investing in infrastructure before the market was ready—recognizing that without charging, there would never be mass adoption.
As I noted in the piece: “Things just have a straighter-line path to getting done” in China, because of this integrated approach. And the real credit goes to China’s willingness to invest in charging infrastructure before demand materialized.
This is a lesson worth reflecting on as we think about how to accelerate electrification globally.
SOURCE: https://www.nytimes.com/2025/08/19/climate/us-electric-vehicle-chargers-china.html
China falls back on gasoline to drive its global EV conquest
Rest of World, August 14
🚗 Bill Russo was cited in Rest of World —in the compelling piece titled “China falls back on gasoline to drive its global EV conquest”.
Read it here: https://lnkd.in/gwvmmA2P
Key Insights from the Article:
📊 Hybrid exports surge: Chinese plug-in hybrid (PHEV) exports tripled year-over-year in early 2025, while battery-electric vehicle (BEV) exports rose ~40%, per China Association of Automobile Manufacturers.
🌍 European demand spikes: Imports of Chinese hybrids to Europe grew sixfold, even as BEV imports declined — showing hybrids are now a core export lever.
💬 My perspective: “In markets where BEV infrastructure or incentives are weak, PHEVs offer a practical solution and allow Chinese players to compete on cost, range, and performance.”
⚡ Market share shift: PHEVs now make up nearly one-third of China’s EV exports, combining flexibility, range, and value to redefine what “going electric” means.
** Why It Matters:**
This isn’t merely a technical shift—it’s a strategic evolution. Chinese automakers are recalibrating their export strategies around market realities and leveraging hybrids to bridge gaps in infrastructure, regulatory landscapes, and consumer preferences. It’s an adaptive move that could reshape global EV competition for years.
Source: https://restofworld.org/2025/china-ev-gasoline-hybrids/
China’s vision for a driverless future is miles ahead of everyone else’s
Rest of World, August 12
🔥 Bill Russo was featured in Rest of World in an insightful article titled “China’s vision for a driverless future is miles ahead of everyone else’s”.
Here’s what stands out:
-
“By 2030, a fifth of new cars sold in China will be fully driverless, and 70 % will feature advanced assisted‑driving technology” — highlighting China’s aggressive trajectory toward autonomous mobility . -
Chinese firms lead in ADAS and robotaxi deployment, operating roughly 2,300 robotaxis across 30 cities, compared to only about 700 in five U.S. cities . -
The article underscores that “strong government backing and infrastructure investment” gives China a substantial edge in scaling AVs—through pilot zones, fast-track permits, and urban redesigns . -
It also shares my perspective: “Chinese tech companies have an edge in AVs because they are much more deeply integrated into the digital lives of consumers.” This integration becomes a powerful data flywheel, feeding AI systems with continuous real‑world information . -
On the cultural side, the article notes public sentiment: 85 % of Chinese consumers are comfortable with autonomous driving—even without human supervision—versus just 39 % in the U.S. .
**Why it matters:**
China’s cohesion of policy, infrastructure, tech, and culture is more than a technological sprint—it’s a systemic leap. This environment fuels rapid innovation, and positions China not just as a testing ground, but as a potential global leader in autonomous mobility.
SOURCE: https://restofworld.org/2025/china-ai-powered-self-driving-cars/
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.
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