Core Insights - Car sales in China increased by 1.3% in the first two months of 2025, with a significant rebound in February where sales surged 26.1% year over year to 1.41 million units, compensating for a 12% decline in January [2][3] - Government subsidies are a major driver of market momentum, with incentives expected to benefit 15 million vehicles in 2025, and over 60% of last year's subsidy recipients opting for electric vehicles (EVs) or plug-in hybrids [3][13] - New Energy Vehicles (NEVs) accounted for 48.8% of total car sales in February, with a year-over-year increase of 79.7% [4] Industry Performance - BYD Co Ltd led the NEV market with sales of 205,711 units in February, a 73.2% increase year over year, capturing a 29.2% market share [4] - Geely Automobile experienced a remarkable growth in NEV sales, surging 197.5% to 93,309 units, securing a 13.2% market share [5] - Tesla's market share in China fell to 3.8%, with sales dropping 11.2% year over year to 26,777 units, and a significant decline in exports of China-made EVs [6] Competitive Landscape - Xiaomi entered the EV market with 23,728 units sold in February, achieving a 3.4% market share, while XPeng and LiAuto captured 4% and 3.7% market shares, respectively [7] - A price war among EV manufacturers is intensifying, with BYD's Seagull model priced under $10,000 and equipped with advanced driving features, prompting competitors to offer similar features without extra charges [8][9] - Leapmotor's B10 electric SUV generated significant interest with over 31,000 pre-orders within 48 hours of its launch, indicating strong demand for budget-friendly smart EVs [10] Future Outlook - March is anticipated to be a strong month for the auto industry, with production and sales expected to rise sharply as factories return to full capacity [12] - Government incentives are projected to exceed 400 billion yuan in 2025, with scrappage policies potentially leading to the replacement of 5 million old cars, further boosting demand [13][14] - NEV production and sales are expected to reach around 16 million units in 2025, surpassing the 12 million recorded in 2024 [13]
China's Auto Market Heats Up: EV Boom, Subsidies & Price Wars