Li Bin Warns Chinese Auto Industry Has Entered Final Stage: Retail Sales May Drop 15%-20% by 2026 as EV Penetration Keeps Rising

At the China Automotive Chongqing Forum held on June 13, 2026, Li Bin, founder, chairman, and CEO of NIO, stated that China's automotive industry has entered its most brutal final stage. He forecasted that domestic auto retail sales in 2026 could decline by 15% to 20% year-over-year. Meanwhile, Li noted that the battery electric vehicle (BEV) market is accelerating into an inflection point with upward momentum, highlighting that BEV penetration in China reached 42.2% in May 2026—a trend he emphasized is irreversible. The industry currently exhibits a structural pattern characterized by overall contraction alongside accelerated internal differentiation: on one hand, macroeconomic pressures and consumer hesitation have significantly dampened overall market demand; on the other, new energy vehicles—particularly BEVs—are displacing internal combustion engine (ICE) vehicles through substitution. This substitution is occurring within a stagnant or even shrinking market, constituting a zero-sum game. As a result, ICE-related production capacity, distribution channels, and R&D investments cannot be phased out in sync, leading to tangible challenges such as asset impairments, inventory pile-ups, and turmoil within dealer networks. Li Bin believes that in the short term, automakers must prioritize safeguarding cash flow amid expectations of a declining market. In the long run, however, the continued rise in BEV penetration coupled with a reshuffling of brand dynamics will create leapfrog opportunities for companies possessing strong technological capabilities and strategic resolve.