Sales of electric vehicles and hybrid cars in China fell for the first time in almost two years last month, underlining slowing demand after a period of rapid growth and aggressive expansion in the world’s largest EV industry.
Retail sales of new-energy vehicles, a term encompassing EVs and hybrid cars, fell 20% to 596,000 units in the first month of 2026, the China Passenger Car Association said Thursday.
The last time China’s auto industry reported an on-year decline in EV and hybrid sales was in February 2024, CPCA data showed.
Retail sales of passenger cars fell 14% in January compared with a year earlier and dropped 32% compared with December.
Sales were largely dragged by the expiration of tax exemptions for purchases of new-energy vehicles implemented in September 2014, the agency said.
“The new-energy vehicles market has entered a phase of normal adjustment,” it added, saying that the short-term fluctuation was expected and does not reflect the market’s long-term trajectory.
That said, analysts expect car-buying demand to cool as the impulse from government subsidies and tax exemptions fades.
Chinese automakers have turned their focus overseas to offset intensifying competition and soft consumption at home.
In January, exports of passenger cars jumped 52% from a year earlier, the CPCA said. Shipments of new-energy vehicles more than doubled.
Chinese EV exports were supported by carmakers’ supply chain and scale advantage, the agency said. Brand acceptance of Chinese EV marques also strengthened, it added.
For 2025, China exported 8.32 million cars, up 30% from 2024. Exports of EVs and hybrids rose 70% to 3.43 million units, much faster than the 16% growth seen in 2024.
Tesla delivered 69,129 cars made at its Shanghai plant to Chinese buyers in January, and exported 50,644 units.
This month, auto sales are likely to decline as typically happens around the Lunar New Year period, the CPCA said.
“February auto sales are therefore expected to mark the absolute trough for the year, which could help ease inventory pressure at the retail level,” the CPCA said.
Write to Jiahui Huang at Jiahui.Huang@wsj.com
