Fuel-Powered Cars Stage a Comeback with Smart Tech: Temporary Rebound in 2025—Can It Last into 2026?

In 2025, China's internal combustion engine (ICE) vehicle market has unexpectedly rebounded. According to data from the China Association of Automobile Manufacturers (CAAM), wholesale sales of conventional fuel-powered passenger vehicles reached 8.141 million units from January to September, up 1.7% year-on-year. In September alone, sales hit one million units, marking the fourth consecutive month of positive growth. Automakers such as Geely, Volkswagen, and Toyota are accelerating their "fuel-electric parity in intelligence" strategies by equipping ICE models priced between RMB 100,000 and 200,000 with advanced smart features—including Qualcomm’s SA8155 chips, HarmonyOS cockpits, and urban NOA (Navigation on Autopilot)—to enhance competitiveness. In Q3, 29 ICE models surpassed monthly sales of 10,000 units, outperforming the all-electric “10,000-unit club.” However, ICE vehicles face significant challenges in intelligent upgrades due to limitations imposed by legacy electronic architectures, 12V power systems, and thermal management bottlenecks. In contrast, new energy vehicles (NEVs) benefit from centralized electrical architectures and high-voltage platforms, giving them a clear edge in intelligent evolution. Industry consensus holds that the current rebound is a temporary resurgence during a transitional phase of technological iteration and unlikely to reverse the long-term downward trend for ICE vehicles. Looking ahead to 2026, the ICE vehicle market share is projected to decline to around 45%, yet over 60% of these ICE models will feature intelligent capabilities. The market is shifting from an “oil vs. electric” dichotomy toward a “smart segmentation” paradigm, with ICE vehicles focusing on entry-level and luxury segments, forming a complementary coexistence with NEVs in a new market landscape.