New Energy Vehicles Lead Trade-In Boom: Penetration to Surpass 60% by 2026

National policies continue to intensify, accelerating the shift from fuel-powered vehicles to new energy vehicles (NEVs) as the primary force in China's vehicle trade-in programs. According to data from the Ministry of Commerce, China plans to facilitate 18.3 million vehicle trade-ins nationwide between 2024 and 2025, with NEVs accounting for nearly 60% of these transactions. By December 2025, NEVs had already captured a domestic retail penetration rate of 59.1%, while retail sales of fuel-powered vehicles declined by 30% year-on-year. In 2026, the government will continue its trade-in subsidy program: consumers scrapping an old vehicle and purchasing a new NEV will receive a maximum subsidy of RMB 20,000, whereas those switching to a fuel-powered vehicle will receive up to RMB 15,000—and no subsidy will be granted for scrapping an NEV to buy a fuel-powered car. The China Passenger Car Association (CPCA) and industry experts forecast that NEV penetration will surpass 60% in 2026, with sales expected to exceed 20 million units, marking the full transition of China’s automotive market into an NEV-dominated era.