China’s EV market reverses after years of growth as subsidies slashed and sales slide 14%

China’s electric-vehicle market, long the engine of global EV growth, has abruptly reversed course. Year-on-year deliveries of new battery-electric cars fell 14% through the first half of 2025, according to the China Passenger Car Association, with 4.7 million EVs registered nationwide. The slide is directly tied to Beijing’s decision to trim purchase incentives by roughly one-third: the national subsidy for a new EV dropped from 15,000 yuan to 10,000 yuan (about $2,220 to $1,480), and the cap now equals 10% of the vehicle’s purchase price. For the cheapest models, the cut is effectively 5,000 yuan ($740) per buyer. The slowdown is also exacerbated by a broader economic cooldown—second-quarter GDP growth clocked in at 4.3%, the weakest since late 2024. Major domestic brands are feeling the pinch. BYD delivered 239,370 vehicles in July, down 9% versus July 2025 but up 4.9% month-on-month. Geely’s July tally rose 4% over June yet remains 29.1% below the same month last year. Smaller players such as Xpeng, Nio, and Li Auto posted July declines of 5.2%, 11.5%, and 1.4% respectively versus June. To offset the domestic slump, BYD and Geely are ramping up exports, while Xpeng, Nio, and Li Auto still sell the vast majority of their vehicles inside China. Analysts at AlixPartners now expect total new-car sales in China to finish 10% lower in 2025 at 24.6 million units, marking the first broad contraction in years and a sharp reversal from the country’s once-unstoppable EV ascent.