The first half of 2026 is over; it is time to review the development of the new energy vehicle market in the first half of the year.

Overall, China's market position dominated by new energy vehicles has become relatively stable. In June, the retail penetration rate of new energy vehicles remained at a historic high of 62.8%.

On July 8, the CPCA released market data for passenger cars in June. The word most used by CPCA Secretary General Cui Dongshu was differentiation — “collapse of domestic fuel car sales, dominant strength of new energy vehicles, and strong growth in exports”. More specifically, passenger car trends were difficult, commercial vehicles were hot, and the performance of plug-in hybrids and extended-range vehicles was far weaker than pure electric models.

From the data perspective, from January to June 2026, new energy passenger car retail sales were 4.704 million units, a year-on-year decrease of 14.0%; wholesale sales were 6.788 million units, a year-on-year increase of 5.1%. The coexistence of negative growth in retail and positive growth in wholesale, reveals the core characteristic of the current market, which is domestic consumption contraction and explosive growth in overseas exports.

With the retreat of subsidies and the impact of high oil prices, new energy vehicles stabilized their basic market share through technology iteration and explosive export growth. Fuel vehicles, under the dual suppression of new energy vehicles and high oil prices, saw their market share shrink significantly.

01

Domestic Brands Lead, New Forces Gain Share, Joint Ventures Face 'Fuel vs. Electric' Contrasting Fortunes

In terms of enterprises, without exception, BYD still leads the pack with a monthly wholesale sales volume of 397,000 units. Domestic brands such as Geely, Chery, and Leapmotor made strong breakthroughs, while joint venture brands showed a dramatic differentiation of 'dismal fuel sales vs. rapid electric growth' — mainstream joint venture new energy retail sales grew by 45% year-on-year, but their fuel car base shrank by 39% concurrently.

Manufacturers with New Energy Passenger Car Wholesale Sales Exceeding 10,000 Units in June

 Source: CPCA

Enterprise Brands with Domestic New Energy Passenger Car Retail Sales Exceeding 20,000 Units in June

Source: CPCA

In terms of new forces, the retail share of new forces rose to 26.0% in June, an increase of 6.5 percentage points year-on-year, and it is particularly worth noting that the proportion of pure electric vehicle sales for new forces reached as high as 82.2%, and the sales proportion of 100,000-150,000 yuan level models increased significantly, indicating that they are penetrating the mass market.

In terms of second-generation creators, new energy brands incubated by traditional large groups such as Zeekr, Deepal, Arcfox, and Lantu performed brightly. The share of independent new energy brands from traditional domestic automakers reached 18.5%, an increase of 5.2 percentage points year-on-year.

In terms of joint venture brands, the penetration rate of mainstream joint venture new energy only rose to 11.9%, but joint venture new energy vehicle sales grew by 45% year-on-year, while fuel vehicle sales plummeted by 39%, forming a sharp contrast. The new energy penetration rate of luxury cars reached 39.6%, but overall retail still declined by 30%, significantly impacted by high oil prices and downgrading consumption.

02

New Energy Vehicle Penetration Rate 62.8%, Extended-Range Wholesale Plunged 25.2% Year-on-Year

From the wholesale perspective, pure electric and plug-in hybrid still maintain positive growth, while extended-range vehicles show a decline in both wholesale and retail; from the retail perspective, all three routes declined, with pure electric having the smallest decline at -6.6%; plug-in hybrid had the largest decline at -27.6%. The growth rate difference between retail and wholesale clearly reflects the degree of reliance on exports to drive each route.

Currently, the characteristic of the pure electric market is 'the more expensive, the easier to sell; the cheaper, the harder to sell'. Pure electric wholesale increased by 10.7% month-on-month in June, significantly higher than the retail month-on-month growth rate. Class B electric vehicles became the only sub-segment with high-speed growth, with wholesale volume of 295,000 units in June, a 37% year-on-year increase, accounting for 30% of pure electric share, an increase of 2 percentage points compared to the same period last year, with high-end models like Model Y and BYD Song continuing to sell well. While the entry-level market saw a cliff-like decline: Class A00 wholesale in June was only 77,000 units, a 50% year-on-year plunge, dropping from nearly 20% last year to 8% of pure electric share; Class A electric vehicles wholesale was 236,000 units, a decrease of 2.7 percentage points year-on-year. Although the combined share of Class A00 and A0 accounts for 40% of pure electric share, it mainly relies on exports for digestion, and the domestic market performance is weak.

Plug-in hybrid models are the sub-segment where domestic and foreign demand divergence is most severe among the three routes. Wholesale volume for the first half of the year was 1.997 million units, a year-on-year increase of 4.6%; retail volume was 1.155 million units, a year-on-year drop of 27.6%. The difference in growth rates between retail and wholesale was 32.2 percentage points,

Extended-range models are the only sub-segment among the three routes to show a decline in both wholesale and retail. Wholesale volume for the first half of the year was 504,000 units, a year-on-year decrease of 13.1%; retail volume was 439,000 units, a year-on-year decrease of 19.4%, and the decline showed an expanding trend — wholesale volume for June alone was 94,000 units, a year-on-year decrease of 25.2%, and a month-on-month decrease of 0.2%.

The share of extended-range vehicles in the new energy wholesale structure has been compressed from about 10% in 2025 to 6.4% (June alone).

The decline in plug-in hybrid and extended-range models is mainly affected by falling battery prices, flash charging technology, and the improvement of charging facilities.

Regarding the poor performance in the June retail sector, Cui Dongshu's explanation is that the Dragon Boat Festival mismatch created a high base effect, the '618' promotion failed to meet expectations, the World Cup kick-off diverted the time and budget of car buyers, the college entrance exam and farming busy season suppressed store traffic, compounded by hot and rainy weather, plus the rare frequency squeeze of high base factors.

In addition, the new national standards for new energy vehicle safety landed in July (mandatory requirements for battery 'thermal runaway without fire'), causing some consumers to possibly be in a state of delayed and waiting consumption.

However, the CPCA expressed concern about the weak growth of economic electric vehicles. They believe that from a long-term popularization trend perspective, economic electric vehicle growth has the most potential; only the popularization of entry-level electric vehicles can truly drive sustainable incremental growth in the car market. However, the reality is that the county and township markets, entry-level models declined too much, the marginal impact of subsidy retreat on low-price models far exceeds that of high-end models. If the situation of 'high-end volume, entry-level collapse' continues, it will seriously restrict the popularization process of new energy. Economic electric vehicle standards are urgently needed to guide the industry to fill the entry market blank.

03

Exports Become Core Engine, Overseas Share Jumps

New energy vehicle exports were the biggest highlight of the first half of the year.

First, explosive growth in exports. In June, new energy passenger car exports reached 499,000 units, a year-on-year increase of 152.7%, a month-on-month increase of 17.6%, accounting for 56.9% of total passenger car exports. Cumulative exports for the first half of the year were 2.231 million units, a year-on-year increase of 124.3%, among which fuel car exports also grew by 33% concurrently. In terms of going global, the situation of 'both fuel and electric increase' was formed.

Secondly, the export structure is also being optimized. Pure electric vehicles account for 58.7% of new energy exports, narrow plug-in hybrids account for 37.7%, up 4.3 percentage points from last year; extended-range accounts for 3.6%. In June, BYD (exports 171,000 units), Chery (74,000 units), and Geely (62,000 units) ranked in the top three for exports. The CKD (complete knock-down assembly) export model was promoted rapidly, with Great Wall and SAIC-GM-Wuling, etc., having CKD shares exceeding 30%, and international system capabilities significantly enhanced.

Additionally, the overseas market share is still jumping up. From January to May 2026, China's new energy passenger cars accounted for 62% of the world share, of which pure electric accounted for 58%, plug-in hybrid accounted for 71%. The sales share of autonomous new energy overseas markets jumped significantly from 15.8% in 2025 to 23.4%, with rapid growth in markets such as Brazil, Australia, Thailand, and the UK. Although the US market was significantly affected by subsidy cancellation fluctuations, European new energy grew by 29% year-on-year, and domestic brands are accelerating to fill the blank.

In terms of market forecasting, the CPCA estimates the year-on-year growth rate of domestic narrow passenger car retail sales in 2026 to be about -14%, but Cui Dongshu believes that from the third quarter onwards, the decline will gradually narrow, and market growth expectations may rise by a few percentage points.

In the first half of 2026, China's car exports reached 4.059 million units, up 63% year-on-year. At this growth rate, breaking 10 million units for the year is almost a certainty — by then China will become the world's first automotive giant to export over 10 million units annually, equivalent to 2.5 times Japan's volume.

But another set of data is not looking so good. From January to May this year, domestic passenger car retail sales reached 7.099 million units cumulatively, down 19.5% year-on-year. Among the five major independent brands, BYD sold 1.8085 million units in the first half, down 15.72% year-on-year. Growth relies mostly on exports. This isn't prosperity; it's like 'starving at home, relying entirely on grabbing from outside'.

Let's first see just how fierce the exports are. Chery exported 940,000 units in half a year, securing the top spot, with a share as high as 74.3% — 3 out of every 4 cars sold were exports. BYD followed with 790,000 units, with 174,800 units exported in June alone. What was most unexpected wasn't the volume, but the direction. In May data from 31 European countries, these five — BYD, SAIC, Geely, Chery, Leapmotor — sold a combined 138,400 units, up 65% year-on-year, surpassing the total of six Japanese brands like Toyota, Nissan, and Honda for the first time. The market share of Chinese brands in Europe jumped directly from 5.6% in May last year to 10.7%. Doubling in one year isn't growth, it's swallowing whole.

But Europeans lost patience. On July 1, the EU's final anti-subsidy duties on Chinese pure electric vehicles officially took effect — 17.4% for BYD, 18.8% for Geely, 35.3% for SAIC, plus a 10% base tariff, pushing the combined tax rate for some manufacturers above 45%. Tougher still, the EU is brewing to include plug-in hybrids in the tax scope. Over the past year, plug-in hybrids were the core channel for Chinese manufacturers to bypass pure EV tariffs; now they're trying to block all paths. But China is not someone to be trifled with. The Ministry of Commerce immediately issued a final anti-dumping ruling on EU pork, with rates ranging from 4.9% to 19.8% for five years. China is the world's largest pork consumer market; the EU's pig feet, ears, and offal rely entirely on China to digest. This blow targets the vote banks of agricultural states. Countermeasures on cognac and dairy products are also coming. Wine merchants in France's Cognac region are already shaking.

But can tariffs really stop us? The Chinese auto manufacturers' response is simple — build factories right at your doorstep. BYD is building a factory in Hungary to start production next year, Chery is laying out plans in Brazil and Spain, and SAIC is deepening roots in Thailand. If tariffs block prices, I'll just bypass your tariff wall. It's exactly the same script as Japanese automakers frantically built factories in the US after the US imposed tariffs back then. The only difference is that Chinese cars going overseas are faster, larger in volume, and the industrial chain is more complete.

Overall, the slump in the domestic car market forces all brands to go outward, and exports have made up for all the growth lost domestically. But the EU's 45% tariff is just the first hurdle; behind it, the door to the North American market is tightly shut, and the fortress of Japanese cars in Southeast Asia won't be breached in a day. The race for Chinese car exports has shifted from 'grabbing incremental growth' to 'fighting hard battles'. 10 million units is inevitable, but the tariff walls, political barriers, and localization difficulties on the road are getting harder and harder.