2026 May Mark Final Year of Double-Digit Growth for NEVs as Market Enters Deep Adjustment Phase

China's passenger vehicle market growth slowed to 3.8% in 2025, with new energy vehicle (NEV) penetration reaching 53.9%—surpassing internal combustion engine (ICE) vehicles for the first time. However, diminishing policy effectiveness, weak consumer confidence, and subsidy rollbacks have led Autohome Research Institute to forecast NEV sales of 14.15 million units in 2026, a year-on-year increase of 10.5%, likely marking the final year of double-digit growth. In terms of structure, battery electric vehicles (BEVs) maintained steady growth, while plug-in hybrids (PHEVs) and extended-range EVs saw significantly slower growth due to constrained supply, rising prices, and intensified competition from discounted ICE models. Chinese brands captured over 65% market share, accelerating their push into the mid-to-high-end segments. Although foreign brands are speeding up their electrification strategies, they continue to struggle against declining market share. On the intelligent driving front, the gap between ICE and NEVs—once converging under the concept of "equal intelligence for oil and electric"—has widened again, with L2-level advanced driver-assistance systems (ADAS) now penetrating 66% of new vehicles. Meanwhile, industry-wide "involution" persists, keeping profit margins under pressure. Exports have emerged as a bright spot, exceeding 7 million units in 2025, with localized production overseas driving Chinese brands’ next phase of global expansion.