Ten Years of Fierce Competition, One Day the Lid Lifts, Who Will Prevail After EV Saturation?

At the end of July, in the underground garage of a residential compound in Pudong, Shanghai, Old Zhou stared at the charging pile for a while. The green light turned on, he unplugged the gun head, got into the Model Y, and drove towards the Yanan Elevated Highway.

Evening rush hour, the elevated highway was gridlocked. He looked left and right, green license plates were everywhere ahead and behind. At least three out of five cars had green plates.

When changing cars a few years ago, Old Zhou calculated the cost: license plate free, electricity cheaper than oil, maintenance convenient.

Switched after calculating, grateful for choosing an EV, choosing Tesla.

Old Zhou is not an exception. A few years ago, people buying EVs had some flavor of trying new things, but now it's gone, because EVs are part of daily life.

When it becomes as daily as it gets, one must ask a question: After saturation, who will EVs be sold to next?

1

Data provides a side of the answer.

Passenger car retail sales were 8.701 million in the first half of the year, down 20% from last year. In June, conventional fuel car sales were only 591,000.

On the other hand, the proportion of New Energy Vehicles reached 62.8%. More than 62 out of 100 new cars had green plates.

The showrooms of traditional fuel cars are getting emptier. It goes without saying that joint venture brands are having the hardest time.

FAW Toyota sold 273,700 vehicles in the first half of the year, down nearly a third from last year, selling over 100,000 fewer cars. Previously relying on classic models like RAV4 and Corolla Cross to support sales, it no longer works.

In the 100,000 to 200,000 price range, domestic brands' plug-in hybrids and pure electric vehicles are densely packed. Large space, smart cockpits, and assisted driving are all prioritized. Relying solely on price wars is hard to withstand.

GAC Toyota's situation is much better, selling about 340,000 units in the first half of the year, exceeding by nearly 70,000. The difference is it has a volume-selling pure EV, the bZ3X, selling over 90,000 in the past 12 months, reaching the level of mainstream fuel cars. The bZ7 will also launch, likely selling well too.

This shows joint venture brands still have a chance. As long as they can create high-quality New Energy Vehicles, they can still compete with new forces.

Looking at luxury brands again. BMW sales in China were over 260,000 in the first half of the year, down 20% year-over-year; Mercedes-Benz 210,000, down nearly 30%; Audi nearly 220,000, down nearly 20%.

The three brands combined dropped by over 20%. Prices kept falling. Audi Q6 comprehensive discount 130,000, cars that landed at 500,000 back in the day can now be bought for 330,000 cash. BMW iX1 clearing inventory, full payment just over 180,000.

Currently, the market share of Chinese brand passenger cars exceeds 75%, joint venture brands combined are less than 1/4. In June, joint venture brand NEV penetration rate was only 11.9%, domestic brands were 81.8%.

Even the King of Joint Ventures, FAW-Volkswagen, has only 0.1% market share in NEV wholesale sales.

The foundation of fuel cars is shrinking, they can't catch EVs either. Joint venture brands occupy neither end.

2

Joint venture brands are falling. Who is going up? Let's look at several major cities.

Shanghai first half 148,700 units, first in the country, up 10% from last year.

Tesla Shanghai Factory is a major account, selling cars produced there domestically, also to Korea, Japan, Middle East, South America. Shanghai sells well due to free license plates plus Tesla's capacity, plus charging available everywhere, but other places can't learn this trick.

Beijing 144,600 units, hardly moved, reason not complex, just limited plates.

In 2026, Beijing gave nearly 120,000 family quotas, over 30,000 individual, applicants nearly 900,000. A friend queued for 5 years said he doesn't hope for plates now, hopes for an answer, when will it be his turn. Beijing's market structure is so, give how many plates, sell how many cars.

Chengdu 136,400 units, ranked third. No plate restriction, over 60% of people buy EVs, relying entirely on products to speak.

Shenzhen 122,000 units, down 16% from last year. BYD's base, NEV proportion passed 60% long ago, pure electric accounted for 70%; Guangzhou 130,500 units, Hangzhou 123,500 units, those who wanted to buy all bought.

After reviewing all, one question remains: How much space do these cities have left?

Tier 1 and New Tier 1 proportions have hit the ceiling. The remaining 40% of people, either no parking spot for charging, or worried about range, or afraid residual value collapses after a few years, or waiting for cars to be cheaper, these people won't spend money on cars for now.

Since domestic demand in Tier 1 cities hit the ceiling, growth must be found elsewhere. The policy direction is downwards.

In June, Ministry of Industry and Information Technology, Ministry of Commerce, etc. 5 departments started this year's New Energy Vehicle Rural Promotion, recommended 155 models, 31 more than last year. From 2020 to now, rural promotion models sold cumulative over 20 million units.

On the surface conditions are met. By end of May, national charging piles 22.497 million. For daily use, 5 yuan per 100km electricity, under 2,000 yuan per year car maintenance. This calculation works well in county/township.

Surface looks complete, but Rural Promotion is not moving city tactics down, logic is different.

Real trouble is not on piles, but on transformers.

Rural transformer capacity insufficient, a village originally 100 kVA, installing more charging piles easily trips breakers.

Trouble with repairs, township mechanics for NEVs few, broken ones towed to county or city.

So Rural Promotion isn't just selling cars, it's piles, grid, after-sales, finance together, a systematic project. Cannot think of selling EVs that can't be sold/wanted in cities to villages.

Not only sell, but usable. This is the key to how far this wave of Rural EV Promotion can go.

3

Domestic demand has hurdles everywhere, the other leg must stretch outwards.

First half exports 5.096 million units, up 65%. NEV exports 2.355 million units, more than doubled.

The path of Chinese car companies going global has passed three stages.

Earliest was complete vehicle export, cars built in China loaded on ships and shipped, small investment fast results, but easiest to get hit.

In 2024 EU imposed up to 35.3% countervailing duties, first half pure EV exports to Europe dropped directly 15%.

Tariffs added, everyone changed path, second stage is building factories overseas.

BYD Thailand factory 16 months to build and produce, annual capacity 150,000, tariff costs pressed down 20%. Hungary factory also producing by year-end. Leapmotor borrows Stellantis plant in Spain for assembly, Chery took over Nissan Barcelona old plant area. From complete vehicle export to capacity export, this is first switch.

Now some top enterprises reached third stage, ecosystem co-construction.

Nio set up R&D center in UAE, Great Wall in Thailand did battery and charging network integration. After Geely took over Proton, required suppliers to adopt Chinese BMS standards. Products out, factories out, standards also going out.

After finishing three stages, overseas market is changing.

Europe May saw a landmark node. BYD, SAIC, Geely, Chery, Leapmotor five Chinese car companies sold 138,400 units in 31 European countries, first time single month exceeded total of six Japanese brands.

On YouTube, a German netizen changed to BYD Dolphin, happily said: 30,000 Euro, everything one needs is there, much cheaper than Japanese brands.

Need to point out Leapmotor, first half exports nearly 100,000 units, exceeded last full year, ranked first in new forces.

Relying on complete vehicle export to push volume is easy, making money hard. Need to calculate, must local production. BYD Thailand, Brazil factories already produced.

This path of going global, finally must take root locally.

4

While venturing outwards, backyard also changing.

From January 1, 2026, NEV purchase tax from exempt changed to half levy, executed at 5%, max cut 15,000 per car. A car excluding tax 300,000, last year exempt 30,000, this year must pay 15,000. 10 years full exemption started rolling back.

Policy dividends narrowing, profit end issues more thorny.

First half vehicle manufacturing average profit margin only 1.5%, lowest in nearly 10 years. Converted, a 100,000 car, manufacturer earns less than 1,500, this is after price war fought over a year.

Fuel car inventory high, forced to drop prices significantly; NEVs for market share, also actively dropping prices. Two forces squeeze together, average drops approaching 15% and 30,000.

Price war fought to now, batch of car companies already lost. Policy retracted, profit thin, this is the industry's deepest concern.

CAAM Deputy Chief Engineer Xu Haidong said, Tier 1, 2 almost at top, countryside is future 10 years growth blue ocean.

Big judgment is like this, applied to individuals is another matter.

Old Zhou's Model Y ran 60,000 km, full charge compared to new car less about 40 km, after-sales said normal degradation.

Green plates on Yanan Elevated Highway still increasing, one by one, window still open, but year by year narrower.

Looking back, old-new replacement never a smooth process, but filled with swordlight and shadow, life and death struggle.

Car market more and more like fierce competition. Who survives, who wins all, everywhere. Who died, is backward capacity, capacity waiting to be cleared.

Market competition, just so plain and simple.......