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Chinese electric vehicle (EV) stocks declined sharply on Monday after new data revealed a slowdown in sales growth for December, heightening concerns about cooling demand in the world’s largest EV market. The weaker-than-expected figures weighed heavily on investor sentiment across the sector, particularly as China begins to scale back policy support for EV buyers.
Shares of BYD, the largest Chinese EV manufacturer and a key bellwether for the industry, fell 2.2% in Hong Kong trading. Although BYD managed to overtake Tesla in global EV sales in 2025, its December sales dropped around 18% year-on-year, marking the fourth consecutive month of decline. The slowdown has raised questions about whether strong overseas expansion, especially in Europe, can continue to offset weaker domestic demand.
Other major Chinese EV makers also posted notable losses. Li Auto slid 2.4% after reporting a steep 24.4% year-on-year drop in December deliveries. NIO and Xpeng saw even sharper declines, falling 6.4% and 5.2%, respectively, reflecting growing investor caution toward growth-focused but loss-making EV companies. Xiaomi, which only recently entered the electric vehicle market, also fell 2.5%, underscoring broad-based pressure across the sector.
According to data from the China Passenger Car Association, EV sales in China grew just 5% year-on-year in December, a significant deceleration from the 32.2% surge recorded in December 2024. The slowdown comes as Beijing moves to gradually wind down EV subsidies and tax exemptions, signaling a shift away from aggressive policy support amid overheated competition. Authorities have also been discouraging automakers from engaging in aggressive price cuts that could further destabilize the market.
Despite strong unit sales in recent years, many Chinese EV makers continue to struggle with profitability, as an intense price war has eroded margins. Tesla has also faced mounting pressure from local competitors in China, while BYD’s expansion into Europe has intensified competition with global automakers. As policy support eases and growth moderates, investors are increasingly focused on which EV companies can sustain demand, protect margins, and remain competitive in a rapidly evolving global market.
