Analysis of the Impact of Slowing NEV Growth on Industry Chain Investment and the Market Outlook for Mini and Small Electric Vehicles

Now let me provide you with a systematic and comprehensive analysis report:

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The NEV market growth rate will slow from over 20% in 2025 to approximately 10% in 2026, marking the industry’s shift from a high-growth phase to a structural adjustment phase [1][2]. Policy changes (halved purchase tax, proportional trade-in subsidies) will exert significant pressure on mini and small electric vehicles; it is expected that the growth rate of A00/A0-class electric vehicles will slow sharply, while the RMB 150,000-200,000 price segment will become the “golden zone” that benefits the most from policies [1][3]. Industry chain investment will face structural adjustments, with intelligent driving and battery technology upgrades emerging as new growth points, and weak suppliers facing intensified survival pressure [4][5].

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Year	Sales (10k units)	YoY Growth Rate	Change from Previous Year
2024	~1050	28%	-
2025E	~1285	22%	-6ppt
2026E	~1414	10%	-12ppt

According to forecasts from Cui Dongshu, Secretary-General of the China Passenger Car Association (CPCA), the growth rate of domestic NEV sales will slow significantly from over 20% in 2025 to approximately 10% in 2026 [1][2]. Zhang Yongwei, Secretary-General of the China Electric Vehicle 100 (China EV 100), is more optimistic, predicting that domestic NEV sales will reach 16.5 million units in 2026 (including 3.5 million units exported), representing a YoY growth of approximately 28%, but this forecast includes a large contribution from exports [2].

are the primary reason for the slowing growth. In 2026, the NEV purchase tax will be adjusted from “full exemption” to “50% reduction”, with the maximum tax relief per vehicle reduced from RMB 30,000 to RMB 15,000, which directly increases consumers’ vehicle purchase costs [1][3]. Meanwhile, the trade-in subsidy policy has been adjusted from fixed-amount subsidies to proportional subsidies based on vehicle price (12% for scrap and replacement, capped at RMB 20,000; 8% for trade-in replacement, capped at RMB 15,000), meaning consumers need to purchase vehicles priced at RMB 166,700 or above to receive the full scrap subsidy [1].

is another important factor. In the fourth quarter of 2025, influenced by the expectation of “paying an additional 5 percentage points in purchase tax next year”, consumers launched a “rush purchase spree” at the end of the year, which pre-empted part of the 2026 purchase demand [3]. Data shows that in November 2025, the discount rates for both NEVs and fuel vehicles reached their annual highs, but passenger vehicle sales in that month fell 8.1% YoY and 1.1% MoM, indicating that the stimulating effect of price wars on sales is weakening [1][2].

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In 2025, the total investment in battery and NEV industry chain expansion projects reached approximately RMB 453.1 billion, showing obvious structural change characteristics [4]:

Segment	2024 Investment Share	2025 Investment Share	Trend
Power Battery	45%	42%	↓ Slowing scale expansion
Motor & Electronic Control	20%	18%	↓ Contraction in traditional segments
Intelligent Driving	18%	22%	↑ Accelerated technological upgrade
Charging Infrastructure	12%	11%	→ Steady growth
Battery Recycling	5%	7%	↑ Circular economy gaining attention

Industry chain investment is shifting from scale expansion to technological innovation, with intelligent driving becoming the segment with the fastest investment growth [5]. Investment in sodium-ion batteries has overtaken solid-state batteries, with 33 new investment projects in 2025 totaling approximately RMB 61.5 billion, among which the RMB 20 billion sodium-ion battery and energy storage industrial park project by Xinjing New Energy in Jungar Banner, Inner Mongolia is the largest single investment [4].

Against the backdrop of policy changes and easing price war expectations, automakers are placing greater emphasis on profit indicators, accelerating the transmission of supply chain pressure to downstream players [1][2]:

• Head Suppliers
  (e.g., CATL, Fudi Battery): With scale advantages and bargaining power, their survival pressure is relatively manageable; BYD’s self-supported power battery installations reached 107.9 GWh in January-November 2025 [5]
• Mid-tier Suppliers
  : Face significant cost transmission pressure and need to maintain competitiveness through technological innovation
• Small/Weak Suppliers
  : Face significantly increased survival pressure, with some enterprises at risk of being eliminated

Automakers such as NIO, XPENG, and Li Auto have required or been required to compress supplier payment cycles to within 60 days, which further intensifies the survival of the fittest in the supply chain [2].

In January-November 2025, domestic power battery installations reached 681.8 GWh, a YoY increase of 43.2%, with full-year installations expected to reach approximately 780 GWh [5]. Mainstream automakers are adopting a diversified strategy for battery supply:

Automaker	Installations (GWh)	Main Suppliers
BYD	107.9	Fudi Battery (in-house)
Geely Group	55.3	CATL, Jiyao Tongxing, Honeycomb Energy
SAIC Group	33.4	Gotion High-Tech, CATL, Rept Blue Whale
Xiaomi Auto	32.3	CATL, Fudi Battery
Leapmotor	24.3	Gotion High-Tech, Zhengli New Energy, Honeycomb Energy

A combination of vertical integration and diversified supply has become the norm; BYD’s vertical integration model of “vehicle-battery” has built a strong supply chain barrier, while other automakers are diversifying their suppliers to spread risks [5].

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The pure electric (BEV) market in November 2025 showed obvious structural differentiation [3]:

Segment	Wholesale Sales (10k units)	YoY Growth Rate	Market Share	Share Change
A00-class	17.7	+1%	17%	-4.1ppt
A0-class	25.9	+0.3%	25%	Flat
A-class	27.2	+5.4%	26%	Increased
B-class	28.4	+9%	27%	-4.1ppt

A00+A0-class budget electric vehicles still account for 42% of the BEV market share, but their growth rate has slowed significantly. Notably, the market penetration rate of NEVs priced below RMB 100,000 has increased from 9% in 2022 to 18.1% in the first 11 months of 2025, representing the largest growth in penetration rate among all segments [2].

The adjustment of the trade-in subsidy policy from fixed-amount to proportional subsidies has created a structural negative impact on mini and small electric vehicles:

:

• To receive the full RMB 20,000 scrap and replacement subsidy: Must purchase a vehicle priced ≥ RMB 166,700
• To receive the full RMB 15,000 trade-in replacement subsidy: Must purchase a vehicle priced ≥ RMB 187,500
• Purchasing a RMB 100,000 mini electric vehicle: Only receives RMB 12,000 in scrap and replacement subsidy (RMB 8,000 less than the full amount)

This means that NEVs in the RMB 150,000-200,000 price segment can receive the maximum subsidy, while consumers of mini and small electric vehicles receive significantly lower subsidies [1][2].

(2026):

• Reduced policy subsidies directly weaken price competitiveness
• Growth rate will slow significantly; the growth rate of A00-class vehicles is expected to drop from double digits to single digits
• Some consumers will shift to models in the RMB 150,000-200,000 segment

:

• First-time buyers and rural markets still have demand foundations
• Maturity of sodium-ion battery technology may reduce costs (CATL announced large-scale application of sodium-ion batteries in 2026) [4]
• Export to price-sensitive markets such as Southeast Asia and the Middle East

:

• Automakers may launch higher-equipped mini and small electric vehicles to enhance attractiveness
• Battery leasing and battery swapping models may be promoted in mini and small vehicle segments
• Export becomes an important channel to digest production capacity

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Price Segment	Policy Benefit Level	Competition Intensity	Investment Attractiveness	Key Players
Below RMB 100,000	★☆☆☆☆	★★★★☆	★★☆☆☆	Wuling, Changan, Chery
RMB 100,000-150,000	★★☆☆☆	★★★★★	★★★☆☆	BYD, Geely
RMB 150,000-200,000	★★★★★	★★★★☆	★★★★★	Leapmotor, BYD, XPENG
RMB 200,000-400,000	★★★★☆	★★★★★	★★★★☆	Li Auto, NIO, Xiaomi
Above RMB 400,000	★★★☆☆	★★★☆☆	★★★☆☆	Huawei Ecosystem, NIO

The RMB 150,000-200,000 price segment has become the “golden zone” favored by policies, supply, and demand [1][2]. On the supply side, the trend of high-end technology downward migration is obvious; configurations originally priced above RMB 200,000, such as 400kW dual motors, lidar-based intelligent driving, and Snapdragon 8295 chips, have been extended to this segment; on the demand side, sales in this price segment reached 2.707 million units in the first 10 months of 2025, second only to the segment below RMB 150,000 [1].

The “Guidelines for Compliance of Price Behavior in the Automobile Industry (Draft for Comment)” released by the State Administration for Market Regulation is expected to prompt automakers to shift from “bottomless price cuts” to a competition strategy that focuses more on profitability [1][2]. More than 10 automakers including BYD, XPENG, BAIC, Changan, Great Wall, Chery, Dongfeng, Leapmotor, and Seres have collectively expressed their response.

However, weak suppliers may face harder times. To avoid the red line of “actual ex-factory price lower than production cost”, automakers will continue to transmit cost pressure to downstream players, maintaining terminal pricing space by depressing component procurement prices [1].

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Based on the above analysis, 2026 NEV industry chain investment should focus on the following main themes:

• Overseas expansion has become an important support for sales and profits; it is expected that some head automakers will complete the core shift to overseas profits in 2026
• Focus on enterprises with localized layouts in Southeast Asia and Europe
• Vehicle exports are transforming to “overseas factory construction + localized marketing” [2][5]

• L3 intelligent driving is rapidly penetrating, and L4 commercialization is approaching
• The share of investment in intelligent driving has increased from 18% to 22%
• Pay attention to new growth curves such as embodied intelligence and robots [5]

• Automakers and component enterprises in the RMB 150,000-200,000 “golden zone”
• Large-scale application of sodium-ion batteries (CATL will launch large-scale application in 2026)
• Battery recycling circular economy [4]

• Policy Risk
  : Further rollback of purchase tax reductions
• Demand Risk
  : Consumption falls short of expectations, price wars persist
• Supply Chain Risk
  : Fluctuations in lithium prices, supplier bankruptcies
• Technology Route Risk
  : Changes in technological routes of solid-state batteries and sodium-ion batteries

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The NEV market is transitioning from a high-growth phase to a structural adjustment phase. The sales growth rate will slow to around 10% in 2026, mainly due to the dual pressures of policy rollback (halved purchase tax, proportional trade-in subsidies) and demand overdraft [1][2][3].

:

1. Investment focus shifts from scale expansion to technological innovation, with the share of investment in intelligent driving increasing
2. Supplier differentiation intensifies, with weak suppliers facing survival crises
3. Overseas expansion becomes an important growth driver, accelerating global layout
4. The RMB 150,000-200,000 segment becomes the “golden zone” for investment

:

1. Short-term pressure: Reduced policy subsidies, significant slowdown in growth
2. Mid-term adjustment: Product upgrades and export expansion become breakthrough paths
3. Long-term differentiation: Some enterprises exit, and market concentration increases

Overall, although the overall growth rate is slowing, the NEV industry still has structural opportunities. Enterprises that can seize the RMB 150,000-200,000 “golden zone”, accelerate overseas layout, and establish advantages in intelligentization and technological innovation are expected to stand out in the adjustment phase [1][2][5].

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[1] Huxiu - “Which Automakers Will Thrive in 2026? We Listed 13 Favorable and ‘Subpar’ Ones” (https://news.qq.com/rain/a/20260103A02PRJ00)

[2] Huxiu - “Which Automakers Will Thrive in 2026?” (https://news.pedaily.cn/202601/559466.shtml)

[3] CPCA - “Analysis of the National Passenger Vehicle Market in November 2025” (https://ne-time.cn/web/article/37336)

[4] Gasgoo - “RMB 453.1 Billion! Daring to Invest? Inventory of 2025 Battery and NEV Investment and Expansion Projects” (https://auto.gasgoo.com/news/202601/8I70441512C501.shtml)

[5] Battery China Net - “2025 Automaker Electrification ‘Year-end Exam’ Results Released, 2026 Power Battery Supply Game Will Intensify” (https://finance.sina.com.cn/stock/relnews/cn/2026-01-06/doc-inhfkfun5918417.shtml)