Full throttle, sudden brakes. China's EV sector is racing ahead—but not without friction.

This week’s edition captures the contrasts that define the current state of China’s electric vehicle market: global leadership on one end, domestic growing pains on the other.

We start with new ICCT data showing how Chinese automakers are pulling away from global rivals, with BYD now outselling Tesla worldwide. But zoom in, and the picture becomes more complex: subsidy freezes, overstocked showrooms, and production cuts signal that not everything is running smoothly at home.

Still, there are bright spots. Weekly sales data reveals ongoing momentum for brands like XPeng and Leapmotor - even as Tesla and Zeekr stumble. And in a refreshing twist, Mazda’s upcoming EZ-60 SUV is drawing strong interest from China’s younger urban drivers, hinting that foreign brands can still find traction in this fast-moving landscape.

Let’s unpack the week.

Sebastian

The Global Automaker Rating 2024/25 from the International Council on Clean Transportation (ICCT) shows a clear shift: Chinese automakers are leading the global EV transition, while legacy brands in the US and Europe are losing ground.

For the first time, BYD surpassed Tesla in global EV sales, growing 25 percent year-over-year. Including plug-in hybrids, BYD saw a 47 percent jump. Companies like Geely, SAIC, and Chery are also accelerating, with some reaching their 2025 electrification goals a year early.

China’s scale is a key factor—its domestic market has enabled faster innovation, driving efficiency in both production and technology. “It’s no longer about meeting future targets. It’s about staying competitive today,” says ICCT CEO Drew Kodjak.

Meanwhile, US and EU carmakers face a dual challenge: catching up technologically while navigating unpredictable regulatory environments. Despite these hurdles, most OEMs have improved EV performance in range, charging speed, and energy use.

As Ceres’ Michael Kodransky notes, “The companies leading on electrification aren’t just ticking boxes—they’re positioning for long-term leadership.”

_{Source: International Council on Clean Transportation – Chinese Automakers Gain Ground in Global EV Race as Other World Leaders Risk Falling Behind / The Global Automaker Rating 2024/25}

While China’s EV makers gain global momentum, cracks are emerging in domestic support programs. In June, at least six cities - including Zhengzhou, Luoyang, Shenyang, and Chongqing - suspended local EV purchase subsidies. Reasons range from depleted funding to a reassessment of capital efficiency.

The pause affects a national scrappage scheme offering up to 20,000 yuan (approx. €2,400) for buyers trading in old combustion cars for new EVs. The program had been extended through 2024 and was credited with boosting retail sales, which rose 6.4 percent in May. Over 4 million subsidy applications had already been submitted by end of that month.

Yet state media reports from Henan suggest systemic loopholes, including dealers registering new cars as “used” to qualify for payouts. The resulting misuse may have drained local funds faster than expected. In response, China’s industry ministry recently urged carmakers to rein in aggressive discounting strategies threatening profitability.

Fresh central funding is expected in Q3, but the subsidy freeze highlights growing tension between stimulus policies and a fiercely competitive EV market.

Even market leader BYD is hitting the brakes. The Chinese EV giant has reduced production by up to one-third at several plants, paused night shifts, and shelved expansion plans. At least four of its seven factories in China are affected, Reuters reports.

The reason: rising inventory and missed sales targets. While BYD sold 4.27 million vehicles in 2024, its 2025 goal of 5.5 million now looks uncertain. Production in April and May barely grew year-on-year—and fell 29 percent compared to Q4 2024.

Dealers are under pressure too, holding an average of 3.2 months of unsold stock—twice the industry norm. One major dealership in Shandong has already shut down. Aggressive pricing, including a recent cut to BYD’s entry-level model, has triggered price wars and hit margins across the sector.

BYD hasn’t commented, but insiders point to cost control and weak demand as key factors. As the domestic market cools, the company is ramping up international efforts to sustain growth.

After news of production slowdowns and inventory build-up at BYD, fresh registration data from Week 25 paints a more nuanced picture. While BYD faces structural challenges, its weekly performance - alongside gains from XPeng, Leapmotor, and Aito - suggests demand remains intact for key models.

Meanwhile, Tesla and Zeekr lost ground, highlighting the ongoing volatility in China’s fiercely competitive EV market. Here's how the major brands fared between June 16 and 22.

Aito

Registered 10,900 vehicles, up 9.0 percent from 10,000 the week before. The Huawei-affiliated brand continues a steady upward trajectory, with volumes showing both short-term and year-over-year stability.

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Avatr

Registered 2,600 vehicles, up 8.3 percent from 2,400. Avatr is keeping a consistent pace in the premium EV segment.

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BYD

Registered 83,400 vehicles, an 18.6 percent increase over 70,300 the previous week – the brand’s strongest showing this quarter. Cumulative June registrations now stand at 208,550, confirming BYD's dominant position in the NEV market.

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Denza

Added 2,960 units, up 5.7 percent from 2,800. A modest weekly rise for the BYD sub-brand as it maintains stable volume in the upper mid-tier segment.

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Fang Cheng Bao

Contributed 4,180 units, up 2.0 percent from 4,100. This rugged off-road sub-brand remains a consistent contributor within BYD Group’s broader portfolio.

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Deepal

Registered 5,600 vehicles, up 12.9 percent from 4,960. Deepal continues to gain traction with its balanced EV and EREV lineup.

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Leapmotor

Delivered 9,700 vehicles, up 10.4 percent from 8,790. Leapmotor’s momentum builds as it benefits from the Stellantis partnership and expanded market reach.

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Li Auto

Registered 8,900 vehicles, up 13.1 percent from 7,870. While still below last year’s levels, Li Auto is recovering ground as it shifts focus toward the upcoming Li i8 SUV.

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Nio Group (Total)

Registered 5,170 vehicles, up 10.0 percent from 4,700. Group-level growth was driven by gains across all three brands.

Nio also launched a surprise BaaS plan for Firefly this week, cutting the starting price to 11,100 USD with a monthly battery lease – a possible response to weaker-than-expected sales.

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Tesla

Registered 13,800 vehicles, down 11.0 percent from 15,500. Tesla’s weekly decline stands out amid industry growth. Compared to last year’s Week 25, Tesla is down nearly 21 percent.

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Xiaomi

Registered 4,620 vehicles, down 16.9 percent from 5,560. The SU7 is showing signs of slowing demand ahead of the planned YU7 SUV launch later this year.

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Xpeng

Registered 8,500 vehicles, up 33.0 percent from 6,390. A sharp rebound for Xpeng, which continues to benefit from sustained Mona M03 demand and improving brand visibility.

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Zeekr

Registered 3,140 vehicles, down 1.6 percent from 3,190. Despite a broad new product push, Zeekr’s weekly decline reflects some volatility in performance.

_{All values are based on Chinese insurance registration data, converted to US dollars using relevant exchange rates. These figures reflect retail registrations, not wholesale deliveries.}

While domestic giants like BYD recalibrate and global players such as Tesla lose traction, one Japanese brand is gaining surprising momentum: Mazda. The Changan Mazda joint venture has logged over 30,000 pre-orders for its upcoming EZ-60 electric SUV since April - marking a major leap in the brand’s China-focused EV strategy.

The EZ-60, set to launch in September, follows last year’s EZ-6 sedan and will be available in two versions: a 600-km battery electric model and an extended-range variant with 160 km of pure electric driving. Mazda’s creative pre-order scheme - offering growing cash-back incentives for early signups - has struck a chord, particularly with younger urban buyers. Nearly 76 percent of reservations come from 25- to 40-year-olds in China’s first- and second-tier cities.

As Changan Mazda prepares for launch, the EZ-60 stands as a rare example of a foreign OEM finding genuine traction in a crowded and highly competitive Chinese EV market.

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