Chinese Automakers With EU Exposure to Benefit From Reduced Tariff Risks — Market Talk

By Yoko Kubota

BEIJING — China cemented its global lead in electric vehicles in 2025 with local brands grabbing further share from foreign carmakers in the world's biggest car market.

Nearly 13 million full EVs and plug-in hybrids were sold in China last year, accounting for 54% of the market. Because the leading EV makers — apart from Tesla — are Chinese companies such as BYD and Geely, the electrification trend helped Chinese brands take nearly two-thirds of the passenger-car market.

Sales of EVs and plug-ins collectively rose 18% in China, marking a contrast with the U.S. and Europe where the transition away from gasoline-powered cars has slowed.

Chinese brands tend to be strong in intelligent-vehicle features and faster when it comes to updating products, said Cui Dongshu, the secretary-general of China Passenger Car Association, which released the 2025 sales data Friday. "Overall, Chinese companies will continue to have a relatively clear advantage" over many foreign brands, he said.

Xiao Feng, an analyst at CLSA, said he expected the share of electric and plug-in cars to rise in coming years to around three-fourths of the Chinese market. That could mostly push foreign carmakers out of the Chinese market by 2030 or later, save for a handful of leading players such as Tesla, Toyota and Volkswagen, he said.

For many other foreign carmakers, "it's basically impossible for them to catch up in the EV space," Feng said.

In the U.S., regulatory changes and weak demand are pushing American automakers to retreat from EV plans. General Motors said Thursday it would book a $6 billion charge on its money-losing EV business, following Ford's announcement in December of $19.5 billion in charges mostly tied to EVs.

Pure electric-vehicle sales in China last year reached 7.9 million cars. That is about six times the estimated U.S. sales of 1.3 million EVs in 2025, which likely ended roughly flat from a year earlier, according to Cox Automotive.

Foreign carmakers have been rushing to restructure their China business while trying to keep a slice of the market. Last year, Volkswagen stopped producing its cars at a plant in Nanjing, and General Motors said it would close plants. This week, GM said it expected to record charges of about $1.1 billion in the fourth quarter tied to its business in China.

Even Tesla, the only foreign brand with a significant foothold in China's EV market, is struggling. Its sales last year in China dropped nearly 5% to about 626,000 cars, CPCA data showed. Globally, Tesla lost the global electric-vehicle sales crown to China's BYD last year after the U.S. carmaker reported delivery declines for the second year in a row.

Volkswagen, long the biggest foreign brand in China, hopes to revive its fortunes this year with a slate of designed-in-China models that took years to develop.

Toyota is building a new Lexus EV plant in Shanghai, and GM said all of its new products to be introduced in China this year would have an EV or plug-in hybrid option. Companies such as Ford and Nissan have repositioned the China market as an export hub to deal with excess production capacity.

Both Chinese and foreign players face fierce competition with constant promotions and price cuts. According to a survey by the China Automobile Dealers Association, just 30% of car dealers were profitable in the first half of 2025 and almost three-quarters sold at least some cars below cost.

Beijing has been trying to nudge consumers to spend more by offering purchase subsidies. Last year, the subsidy went up to the equivalent of around $2,900 when buyers unloaded an old car for a new electric or plug-in vehicle. Around 11.5 million vehicles were purchased through the trade-in program in 2025, the government said.

However, some localities ran out of their budget for incentives by December, the passenger-car association said. That caused passenger-car sales to fall about 14% to 2.3 million vehicles in December compared with a year earlier. Some consumers were holding back in hopes of a better deal this year, officials said, although Beijing is trimming certain subsidies in 2026.

Overall, China's passenger-car market last year grew at its slowest pace in three years, expanding by around 4% to 23.7 million vehicles.

Write to Yoko Kubota at Yoko.Kubota@wsj.com

XPeng's new product pipeline this year and planned promotions should help the carmaker tackle challenges amid slowing demand in China's auto industry, Nomura analysts write in a note. The company hosted its first new product launch event for 2026 on Jan. 8, where it reiterated its aim to delve deeper into the physical AI segment with four new model launches. XPeng also plans to offer a number of promotions in 1Q, including a discount to offset the incremental increase in China's EV purchase tax for entry-level models, Nomura says. These should help boost XPeng's 1Q orders, it adds. (jiahui.huang@wsj.com; @ivy_jiahuihuang)

By Jiahui Huang

Chinese automaker NIO will enter the Australian and New Zealand markets this year as the company presses its overseas expansion amid intensifying competition in China's auto market.

NIO will likely launch its electric vehicles in Australia and New Zealand in the second half of 2026, said Chris Chen, NIO's head of global business, in an interview on Thursday.

The company is also entering the Thai market in March with a launch of its Firefly-branded vehicles, he added.

"We started expanding our business globally toward the end of 2024, with a focus on entering more overseas markets beyond Europe," Chen said.

NIO, like many other of its Chinese automakers peers, has been expanding aggressively overseas as demand in the local market slows. Also, competition in the Chinese auto industry is expected to intensify further with 119 new model launches in the pipeline for this year, according to Goldman Sachs analysts in a recent note.

Most of NIO's overseas expansion in recent years has been into Europe but it wants to broaden its reach this year.

The company kicked off the year by launching its first right-hand-drive model under its Firefly brand at the Singapore Motorshow on Thursday. Firefly offers small, high-end EVs and is positioned to compete against the brands such as the iconic Mini or Smart--a joint venture EV company established by Germany's Mercedes-Benz and China's Geely Group.

"Singapore is our first right-hand-drive overseas market, and it carries significant strategic importance for us," Chen said.

NIO's flagship batter-swapping technology isn't available to Singapore buyers yet as the company hasn't established its battery-swapping stations in the city-state.

"We're currently developing the fifth generation of battery-swapping station, which is projected to be launched in China in mid-2026," Chen said, adding that the company will also tweak its battery-swapping stations to meet standards in overseas markets.

Chinese EV makers have been using various strategies to expand overseas. BYD is known for giving customers high value for money while XPeng brands itself as a leading AI and tech company with advanced driving assistance features. NIO is trying to use its flagship Firefly brand to expand overseas by emphasizing its small size and advanced design.

"Our key focus for this year and next year is to use Firefly brand to enter more overseas markets steadily," Chen said. He noted that Firefly's small size was well suited to small parking spaces commonly seen in Europe.

NIO also aims to expand to U.K. and French markets and Europe will remain a key focus market this year, Chen said.

The company hasn't reached profitability yet but the company wants to break even on an adjusted basis in the fourth quarter of 2025. Chen said achieving this looks promising and the company's main goal for 2026 is to reach profitability.

For the third quarter of 2025, NIO's net loss narrowed to 3.66 billion yuan, equivalent to $523 million, from 5.14 billion yuan in the same period a year earlier. Its revenue rose 17% on year to 21.79 billion yuan.

Write to Jiahui Huang at jiahui.huang@wsj.com

By Jiahui Huang

Chinese automaker NIO will enter the Australian and New Zealand markets this year as the company presses its overseas expansion amid intensifying competition in China's auto market.

NIO will launch its electric vehicles in Australia and New Zealand this year, likely in the second half of 2026, said Chris Chen, NIO's head of global business, in an interview on Thursday.

The company is also entering the Thailand market in March with a launch of its Firefly-branded vehicles, he added.

The move comes as Chinese automakers have been expanding aggressively overseas amid intensifying competition in the domestic market. Most of NIO's overseas expansion has been into Europe and the Middle East.

NIO launched its first right-hand-drive model under its Firefly brand at the Singapore Motorshow 2026 on Thursday.

Write to Jiahui Huang at jiahui.huang@wsj.com

Goldman Sachs expects China's 10 large cap private enterprises to perform well in 2026 and beyond, thanks to an easing regulatory stance toward the private sector and breakthroughs in AI. These companies, namely Tencent, Alibaba, CATL, Xiaomi, BYD, Meituan, NetEase, Midea, Hengrui and Trip.com, are seen to further increase their dominance in China's stock market, similar to the Magnificent 7 stocks in the U.S. The group, dubbed the Chinese Prominent 10, is forecast to deliver earnings growth of 13% on a compound annual basis in 2026-2027. GS also sees scope for further global market-share gains by Chinese companies, citing export strength. About half of the Chinese Prominent 10 are well positioned to benefit, given their strong balance sheets, cash flows, scale advantages and leading technologies, they say. (jason.chau@wsj.com)

Nvidia's new artificial-intelligence platform, open models and ecosystem should create demand for robotaxis and support global growth, Citi analysts write in a note. Citi forecasts the global robotaxi market will grow to $188.91 billion in 2034 from $4.43 billion in 2025. China's total addressable market for robotaxis will rise to $67.59 billion in 2035 compared with $39 million in 2025. Nvidia's initiatives will likely increase investors' confidence and directly benefit Pony AI and WeRide from a software angle. Automakers such as BYD, Geely Automobile, Great Wall Motor, SAIC and Xiaomi, as well as ride-hailing platform Didi, could also benefit from the robotaxi industry's growth. In terms of hardware, Chinese lidar sensor maker Hesai will benefit. (jiahui.huang@wsj.com; @ivy_jiahuihuang)