Chinese EV Makers Could See Steeper Sales Declines in February — Market Talk

By Mauro Orru

Tesla closed the year with lower sales in Europe as Chinese auto giant BYD continued to outpace Elon Musk's electric-vehicle maker.

New-car registrations for Tesla models, a reflection of sales, slumped 20% on year to 35,280 units in December across the European Union, the U.K., Iceland, Liechtenstein, Norway and Switzerland, according to the European Automobile Manufacturers' Association, an industry body also known as ACEA. On an annual basis, Tesla sales contracted 27% to 238,656 units.

In contrast, registrations for China's BYD more than tripled to 27,678 units last month and to 187,657 for the whole year, according to ACEA data. While BYD still sold fewer vehicles in Europe than Tesla, the figures show how the fortunes of two key EV makers are diverging.

BYD has experienced a meteoric rise in the continent thanks to its relatively cheap lineup of electric and hybrid vehicles, creating stiff competition for both well-established domestic carmakers such as Volkswagen as well as foreign rivals like Tesla.

Meanwhile, Tesla has had to contend with the fallout from Musk's involvement with the Trump administration that came to an end a few months ago, weighing on buyer sentiment. Tesla sales gloablly fell 9% in 2025 and 16% for the fourth quarter compared with a year prior. The company lost its crown as the world's leading EV maker to the Chinese company BYD.

Earlier this month, Musk said Tesla would stop selling a suite of advanced driver-assistance features for a one-time payment after Feb. 14, switching instead to a monthly subscription service.

Tesla has been offering its Full Self-Driving system for a one-time payment of $8,000 or a subscription of $99 a month in the U.S. The announcement came as the group is looking to grow its recurring subscription revenue.

The EV market in the EU continued to improve in December, according to ACEA data. Sales of battery-electric vehicles grew 51% on year. Registrations of hybrid-electric cars increased 5.8%, while plug-in-hybrid models grew nearly 37%.

ACEA said passenger-car registrations in the EU increased 5.8% in December to 963,319 vehicles, with sales up 9.7% in Germany and 2.3% in Italy, but down 5.8% in France.

Write to Mauro Orru at mauro.orru@wsj.com

XPeng shares fell over 2%% in premarket trading on Thursday, even after the Chinese EV maker rolled out a long-term financing offer in its home market, mirroring a strategy recently introduced by Tesla and quickly adopted by several rivals.

Seven-Year Financing Rolled Out

XPeng announced on Weibo that vehicles purchased between January 21 and January 31 will qualify for a seven-year low-interest financing offer on its entire lineup, according to a report by CnEVPost.

The deal applies to the Mona M03 electric sedan, which starts at 119,800 yuan ($17,210), allowing buyers to reduce monthly payments to as little as 1,355 yuan with a 15% down payment.

XPeng didn’t specify what the interest rate would be, but framed the offer as helping to reduce the upfront cost of ownership.

Tesla Sets The Template

XPeng joining the fray came days after Tesla said Jan. 6 that customers in China would be able to access seven-year ultra-long-term loans at lower interest rates for locally made cars.

Tesla said during the promotional period through Jan. 31, the financing would apply to its Model 3 and Model Y vehicles. It also marks the longest financing term any automaker has offered in China.

Tesla stated customers could save as much as 33,479 yuan while interest rates could be as low as 0.98% annualized. The electric vehicle maker is hoping the program will help soften the blow of China’s impending EV purchase tax, which starts in 2026.

Financing Replaces Price Cuts

The shift reflects growing pressure on automakers to stimulate demand without cutting sticker prices, as regulators push back against aggressive discounting across the sector.

On Jan. 14, China’s Ministry of Industry and Information Technology and other government departments held a symposium with new-energy vehicle companies, urging the industry to curb what officials described as “disorderly price wars.”

Following Tesla’s move, other automakers have quickly followed. Xiaomi’s EV unit announced similar incentives for its YU7 SUV on Jan. 15, while Li Auto introduced extended financing offers on Jan. 20.

Policy Backdrop Supports Consumer Credit

Chinese policymakers have doubled down on calls to increase financial incentives for vehicle purchasers and ease access to car ownership in recent months. 

With national trade-in subsidies expected to remain on pause for now and purchase taxes slated to return in 2026, automakers are turning to extended low-rate financing to stand out in one of the most competitive EV markets globally.

How Did Stocktwits Users React?

On Stocktwits, retail sentiment for XPeng was ‘bearish’ amid ‘low’ message volume.

XPeng’s U.S.-listed stock has risen 36% over the past 12 months.

China's auto demand this year will likely remain broadly flat given front-loading in 2024 and softer momentum into late 2025, HSBC Global Research analysts write in a note. The trade-in subsidies are extended, but the support is scaled back as the amounts are capped relative to vehicle prices, reducing benefits for lower-priced models and making policy less directional than prior years, they say. The EV demand growth is set to moderate to around 15% this year, they add. Some late 2025 demand may roll into early 2026, but this is not enough to alter the normalization trend given weak consumption sentiment in general in China, they say. Among the Chinese automakers, HSBC Global Research favors BYD and XPeng. (jiahui.huang@wsj.com; @ivy_jiahuihuang)

XPeng Inc. shares traded lower in Hong Kong on Tuesday, even after the Chinese EV maker confirmed progress on its humanoid robotics program, as investors weighed a recent price target cut on the company.

Robot Milestone Confirmed By CEO

XPeng CEO He Xiaopeng said the company has completed its first ET1 humanoid robot prototype developed to automotive-grade standards.

“Today, the first unit of our ET1 robot, developed to automotive-grade standards, has successfully rolled off the production line,” He wrote on X on Monday. “With the team, we spent the entire day observing and discussing the details behind it. This marks a critical step toward the large-scale mass production of advanced humanoid robots this year.” He did not provide further technical details or share images of the prototype.

XPeng’s Humanoid Robot Push

XPeng has been steadily expanding its ambitions beyond electric vehicles into AI and robotics.

At its AI Day event in November 2025, the company said it aims to achieve mass production of high-level humanoid robots by the end of 2026. During the event, XPeng unveiled its next-generation Iron humanoid robot, which drew attention for its natural, fluid “catwalk” movements and highly realistic human posture.

The Iron humanoid robot features a humanoid spine, bionic muscles, flexible skin, a 3D curved display on its head, and hands with 22 degrees of freedom. It is powered by XPeng’s second-generation Vision-Language-Action (VLA) model and three in-house-developed Turing AI chips, delivering 2,250 TOPS of computing power.

According to XPeng, the robot uses all-solid-state batteries to enable lightweight design, high energy density, and improved safety. The company said initial applications will focus on commercial service scenarios.

XPeng first unveiled its earlier-generation Iron humanoid robot at its 2024 AI Day event. That model stood 178 cm tall, weighed 70 kg, and was designed to closely resemble human movement and posture.

Analyst Target Cut Weighs On Shares

The robot update came days after Macquarie lowered its price target on XPeng to $26 from $32, while maintaining an ‘Outperform’ rating.

Macquarie said 2026 is expected to be a transition year for the company as it expands its product portfolio with up to four new models amid slowing demand in China’s EV market. The brokerage firm added that the net income breakeven could vary depending on the revenue structure tied to Volkswagen volume-based fees.

Robotics Race Draws Broader Attention

XPeng’s robotics push has unfolded alongside growing global interest in humanoid robots among EV makers.

Tesla CEO Elon Musk has described the company’s Optimus humanoid robot as its “biggest product of all time,” predicting it could one day scale to tens of billions of units. Musk has said Optimus robots are already operating autonomously within Tesla facilities.

In November 2025, He responded on X after Musk shared a video featuring Tesla’s Optimus robot alongside another humanoid that appeared visually similar to XPeng’s Iron model. “Let this stand as the final proof: the robot that mastered the catwalk is built by a Chinese startup,” He wrote. “The journey continues, and we will advance, step by step.”

How Did Stocktwits Users React?

On Stocktwits, retail sentiment for XPeng was ‘bearish’ amid ‘low’ message volume.

XPeng’s U.S.-listed stock has risen 49% over the past 12 months.