China Jan NEV retail sales down 20% year-on-year, 1st drop in 2 years

• The combination of the seasonal slowdown at the start of the year and reduced policy support has impacted China's NEV sales.
• BEV retail sales in January were 348,000 units, a 17% year-on-year decrease, marking the first year-on-year decline since March 2024.

China's new energy vehicle (NEV) retail sales saw a significant decline last month, impacted by the seasonal slowdown at the start of the year coupled with reduced policy support.

NEV retail sales in January came in at 596,000 units, down 20% year-on-year and down 55% month-on-month, according to data released Thursday by the China Passenger Car Association (CPCA).

This marks the first year-on-year decline in China's NEV retail sales reported by the CPCA since March 2024. The figure fell short of the CPCA's preliminary estimate of 800,000 units released late last month.

Entering 2026, Chinese NEV buyers now face a 5% purchase tax, rather than the previous full exemption from the 10% rate.

Additionally, vehicle trade-in subsidies expired at the end of last year. China has extended these trade-in subsidies with adjusted details, currently in a transitional phase.

In China, NEVs include battery electric vehicles (BEVs), plug-in hybrid electric vehicles (PHEVs), and fuel cell vehicles.

BEV retail sales in January were 348,000 units, down 17% year-on-year and down 56% month-on-month. This marks the first year-on-year decline in BEV retail sales since March 2024.

BEVs accounted for 58.39% of total NEV retail sales in January, slightly below December's 58.49%.

Hybrid vehicles, including PHEVs and EREVs, recorded retail sales of 248,000 units in January, down 24% year-on-year and down 55% month-on-month.

Excluding EREVs, PHEV models saw retail sales of 172,000 units in January, accounting for 28.86% of NEV retail sales.

PHEV retail sales declined by 31.2% year-on-year, marking the seventh consecutive month of year-on-year decline, and fell by 58% compared to December.

EREV retail sales in January were 76,000 units, accounting for 12.75% of NEV retail sales. This represents a 0.8% increase year-on-year but a 48% decrease compared to December.

China's passenger vehicle retail sales, including sedans, SUVs (sport utility vehicles), and MPVs (multi-purpose vehicles), totaled 1,544,000 units in January, down 13.9% year-on-year and down 32% from December.

NEVs' retail penetration rate in China was 38.6% in January, lower than the 41.5% recorded in the same period last year and the 59.1% seen in December.

Domestic brands achieved a 61.7% NEV retail penetration rate in January, while luxury brands was 16.1% and mainstream joint-venture brands recorded 4.3%.

China's passenger NEV wholesale sales totaled 864,000 units in January, down 3.3% year-on-year and 45% month-on-month.

NEV wholesale penetration in January was 43.8%, higher than the 42.3% recorded in the same period last year but lower than December's 56.0%.

Domestic Chinese NEV brands saw a wholesale penetration rate of 57.9% in January, while luxury brands was 39.8% and mainstream joint-venture brands stood at 3.6%.

Passenger NEVs exported from China in January totaled 286,000 units, a 103.6% year-on-year increase, accounting for 49.6% of total passenger vehicle exports.

BEVs contributed 65% of NEV exports in January, down from 67% in the same period last year.

Exports of A0-segment and A00-segment BEVs accounted for 50% of NEV exports, up from 41% year-on-year.