New Energy Vehicle Sector Continues to Retreat; January 2026 Sales Post First Negative Growth in Six Years

In February 2026, the new energy vehicle (NEV) sector continued its downward trend that began in October 2025. On February 5, the NEV segment on China’s A-share market fell by 1.52%, while the Hong Kong-listed segment declined by 0.37%. Market values of leading automakers—including BYD, Xiaomi Group, Seres, and CATL—plummeted significantly. The industry is grappling with multiple pressures: January 2026 sales posted a year-on-year decline, marking the first negative growth in nearly six years; dealer inventory levels have risen sharply; and prices of key raw materials such as battery-grade lithium carbonate have surged, driving up vehicle production costs and squeezing automakers’ profit margins. As a result, most companies are reporting low net profit margins or even losses. However, automakers with comprehensive operational capabilities, such as Geely and Chery, have demonstrated relatively stable performance. Industry insiders believe that despite short-term headwinds, the long-term investment value of the NEV sector remains intact.