China's EV slowdown persists as BYD posts near two-year low in sales

Core Insights - BYD reported a significant decline in local sales in January, marking the lowest level in nearly two years, indicating challenges in the Chinese auto market [1] - Major electric car brands, including Xiaomi and Xpeng, experienced sharp sales drops in January compared to December [2] - The Chinese auto market is under increasing pressure due to policy changes and competitive factors, leading to potential delays in consumer purchases and cautious automaker strategies [3] Industry Overview - The reinstatement of a 5% purchase tax on electric vehicles as of January 1 has contributed to the slowdown in sales, after a long period of tax exemption [4] - BYD is expected to maintain its market dominance despite challenges, with planned upgrades in charging, energy storage, and intelligent driving infrastructure [7] - The new energy vehicle sector saw only a 2.6% year-on-year increase in sales in December, indicating a trend of slowing growth [8] Economic Impact - The automotive sector is crucial for employment in China, contributing to approximately 30 million jobs, which is over 10% of urban employment [9] - The economic significance of the automotive sector is relatively small compared to real estate, accounting for only 3.7% of fixed asset investment last year [10] - There are expectations that the Chinese government may reinstate subsidies for the automotive sector if the situation worsens, particularly in light of the ongoing property slump [9]