The Chinese electric vehicle sector is on watch as more reports indicate that sales trends are cooling off from their sizzling pace of the last few years.
BYD Company (OTCPK:BYDDF) has reportedly lowered its 2025 sales target to 4.6 million vehicles from a prior outlook for 5.5 million vehicles. Meanwhile, NIO (NYSE:NIO) CEO William Li highlighted that demand could slow during the first quarter of 2026 due to a lower level of government tax incentives.
On a broad scale, China is experiencing deflationary pressures and a prolonged housing slump, which have weakened consumer demand for big-ticket items like electric vehicles. An intense pricing war has cut into automaker margins and reset thinking on production goals.
Over 50% of auto sales in China are now new energy vehicles, which include battery electric vehicles, plug-in hybrids, and some fuel cell vehicles.
In Thursday morning trading, Polestar Automotive (PSNY) fell 6.8%, BYD Company (BYD) shed 4.2%, and NIO (NYSE:NIO) peeled off 5.4%. XPeng (XPEV) traded 2.7% lower, and ZEEKR (ZK) declined 1.5%. Li Auto (NASDAQ:LI) and Tesla (TSLA) were both marginally lower.
Despite BYD’s (OTCPK:BYDDF) lowered sales expectations, the stock has the highest Seeking Alpha Quant Rating in the auto sector.