Analysis of the Evolution of Competitive Landscape in China's Automotive Industry and Investment Insights

According to brokerage data, China’s new energy vehicle market has undergone a fundamental transformation. In November 2025, the share of new energy vehicles in new passenger car sales reached

, and Chinese domestic brands controlled of the electric vehicle market [1]. This implies:

• The structural shift from fuel vehicles to new energy vehicles has been completed
• Independent brands have formed a dominant market position
  , with foreign and joint venture brands lagging far behind in the new energy sector
• China accounts for 68% of global new energy vehicle production
  , becoming the global new energy vehicle manufacturing center [1]

Traditional joint venture brands (Volkswagen, Toyota, Honda, GM, Ford, etc.) are experiencing a

in their share of China’s automotive market. Although these enterprises have large-scale local manufacturing operations in China, their [1]. This reflects:

• Slow electrification transition of joint venture brands
  , with insufficient product competitiveness
• Rapid loss of fuel vehicle market share
  , and no effective replacement by new energy products
• Weakened brand premium capability
  , and declining consumer loyalty to joint venture brands

According to brokerage data and market analysis, the current Chinese new energy vehicle market presents the following characteristics:

• Delivered over
  4.54 million
  passenger vehicles in 2025, a year-on-year increase of 6.94% [1]
• Its market share in China far exceeds other competitors, being
  more than 6 times
  Tesla’s China sales (Tesla’s China wholesale sales from January to November 2025 were 735,000 units) [1]
• Market capitalization reached 903 billion USD, with strong financial strength and scale effect [0]

• Li Auto
  (market capitalization: 17.5 billion USD): The only new force to achieve stable profitability, with a net profit margin of 3.63% in Q3 2025 [0], but monthly sales fluctuated (only 30,700 units in July, a year-on-year drop of 40%) [2]
• NIO
  (market capitalization: 11.9 billion USD): Sustained losses, with a net profit margin of -31.46% in Q3 2025 [0], facing great financial pressure
• XPeng
  (market capitalization: 18.9 billion USD): Still in loss, with a net profit margin of -4.04% in Q3 2025 [0], but achieved sales growth in 2025 relying on economical models like the MONA series [1]

• Xiaomi SU7
  surpassed Tesla Model 3 in sales in some periods [1]
• Huawei Series (AITO)
  rose rapidly relying on intelligent advantages
• Leapmotor
  and other cost-effective brands broke through 50,000 units in monthly sales for the first time in July 2025 [2]

• The market has entered the
  stock competition
  phase from “incremental competition”, and slowing growth forces weak players to exit
• “Anti-involution” policies
  promote industry consolidation, with leading enterprises expanding their advantages through technological upgrading and capacity integration [3]
• Some new force car companies face
  capital chain断裂 risks
  , being acquired or exiting the market

• Domestic market growth slows down,
  overseas expansion becomes the main growth engine
• BYD made breakthroughs in mature markets like Germany and Japan, with monthly sales in Europe exceeding 5,000 units [3]
• Trade barriers and policy risks increase, requiring response through localized production

• China’s NEV penetration rate is expected to reach
  90%
  by 2030, taking 5 years from 50% to 90% [1]
• The market enters maturity
  , with competition focus shifting from “scale expansion” to “efficiency improvement”

• From “electrification” competition to
  “intelligence” competition
  (autonomous driving, smart cockpit)
• From “product power” competition to
  “ecosystem” competition
  (charging network, user service, data value)
• From “domestic market” competition to **“global market” competition

• Core Advantages:
  Vertical integration supply chain, scale effect, full-stack self-developed technology
• Financial Health:
  ROE 17.62%, net profit margin 4.56%, leading profitability in the industry [0]
• Reasonable Valuation:
  P/E 23.32x, lower than Tesla’s 279.47x [0]
• Investment Logic:
  Global new energy vehicle manufacturing leader, benefiting from industry consolidation and overseas expansion

• Core Advantages:
  Brand premium, FSD autonomous driving technology, global layout
• Risk Tips:
  Pressure on China market share, European registrations dropped 11.8% year-on-year in November [1]
• Valuation Controversy:
  P/E as high as 279.47x, requiring sustained high growth support [0]
• Investment Logic:
  Transformation from an automotive company to an AI/robot platform, long-term value revaluation

• Core Advantages:
  Precise product positioning (family users), extended-range technology route, already profitable
• Risk Tips:
  Blocked pure electric transition (MEGA failure), facing fierce competition from AITO and Xiaomi [2]
• Investment Logic:
  If it can successfully transition to pure electric, it has high growth elasticity

• Core Advantages:
  Intelligent technology (autonomous driving), progress in urban NGP implementation
• Risk Tips:
  Sustained losses, large cash flow pressure
• Investment Logic:
  Technologically leading but commercialization capability to be verified, high risk and high return

• Core Advantages:
  High-end brand positioning, battery swap mode, user community
• Risk Tips:
  Huge losses (net profit margin -31.46%), high capital chain risk [0]
• Investment Logic:
  Needs stronger financial support and strategic transformation, highest risk

• Autonomous Driving:
  NVIDIA H200 supply to China gradually liberalized, AI server manufacturers’ orders scheduled until Q2 2026 [3]
• Smart Cockpit:
  Tech giants like Huawei and Xiaomi enter, promoting supply chain upgrading

• Power Battery:
  Leaders like CATL benefit from industry consolidation, with profit margins starting to recover [3]
• Thermal Management:
  Liquid cooling technology penetration in intelligent computing centers exceeds 50% [3]

• Preferential purchase tax restored, subsidies retreated, policy support weakened in 2026 [1]
• Anti-involution policies may impact some enterprises

• Price wars continue,
  profitability is under pressure
• Market concentration increases,
  living space for second and third-tier car companies is compressed

• Valuation of some new forces is still high,
  requiring sustained growth support
• Industry growth slows down,
  valuation system may be restructured

China’s new energy vehicle market has entered a new phase of

. After independent new energy car companies’ market share exceeded 70%, the industry’s competitive landscape will evolve as follows:

1. Market concentration continues to increase
   , with leading enterprises (BYD, Tesla, etc.) further expanding their market share
2. New forces accelerate differentiation
   , with enterprises with weak financial strength and insufficient product competitiveness exiting the market
3. Joint venture brands’ share continues to decline
   , unless they can quickly launch competitive new energy products
4. Going overseas becomes a must-answer question
   , domestic market growth peaks, overseas expansion determines long-term ceiling
5. Competition dimensions upgrade
   , from electrification to intelligence, from products to ecosystems, from domestic to global

• First Choice for Leaders:
  Leading enterprises with full industrial chain advantages like BYD
• Select New Forces:
  Focus on profitable enterprises with differentiated advantages like Li Auto
• Layout Intelligence:
  Supply chain enterprises of core technologies like autonomous driving and smart cockpit
• Focus on Overseas Expansion:
  Vehicle enterprises and component suppliers with global competitiveness

China’s new energy vehicle market has entered the “stock market” from the “incremental market”,

[0] Jinling API Data - Financial data and stock performance of BYD, Tesla, NIO, Li Auto, XPeng

[1] Forbes - “China’s Ghost City Dividend: Building A World-Class Supply Chain” (December 24, 2025) - https://www.forbes.com/sites/jonmarkman/2025/12/24/chinas-ghost-city-dividend-building-a-world-class-supply-chain/

[2] Zhihu - “Li Auto’s sales dropped significantly in July, while XPeng, Leapmotor and Xiaomi performed brightly. What are the reasons behind it?” - https://www.zhihu.com/question/1935393720695526527

[3] Yahoo Finance - “JPMorgan is optimistic about the four major theme drivers of the MSCI China Index in 2026” (2025) - https://hk.finance.yahoo.com/news/摩根大通看好2026-msci中國指數-ai-反內卷-海外布局與消費復甦四大主題驅動-231004197.html

[4] CNBC - “China EVs in 2026 look less like a boom and more like a survival test as global expansion ramps up” (December 30, 2025) - https://www.cnbc.com/2025/12/30/china-electric-car-2026-price-war-evs-sales-global-expansion-slowdown-price-war-2025.html

[5] CNBC - “BYD’s China EV deliveries sharply decline in December, but lead overall sales in 2025” (January 2, 2026) - https://www.cnbc.com/2026/01/02/byds-china-ev-deliveries-sharply-decline-in-december-but-lead-overall-sales-in-2025.html

[6] CleanTechnica - “How Long Until China Is At 90% Plugin Vehicle Sales?” (January 4, 2026) - https://cleantechnica.com/2026/01/04/how-long-until-china-is-at-90-plugin-vehicle-sales/amp/