Dozens of Chinese electric vehicle (EV) makers face a do-or-die moment in 2026, according to analysts, amid weakening domestic demand that is expected to see perennial loss-making firms exit the world’s largest car market.
About 50 unprofitable mainland Chinese EV makers are under pressure to scale down their business or wind down operations, as the country’s automotive sector is projected to report a sales drop next year – the first such contraction since 2020 – owing to the industry’s overcapacity woes and softening government support.
“Time is against those players whose cars cannot impress young drivers,” said Qian Kang, who owns a factory that makes automotive printed circuit boards in eastern Zhejiang province. “Performance next year will be crucial for most of the unprofitable EV assemblers.”
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Grappling with expiring cash subsidies and tax incentives, the domestic car market is forecast to see deliveries slump next year even if assemblers offer steep discounts to lure buyers, according to the consensus forecast among auto analysts.
Beijing is expected to announce whether the 20,000 yuan (US$2,852) trade-in subsidy would be renewed in January.
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EV buyers are currently exempt from a 10 per cent purchase tax. These purchases will incur a 5 per cent tax from January until the regular 10 per cent tax rate returns in 2028.