NEW DELHI, India — The long-term profit outlook for China’s electric vehicle makers is coming under growing strain as weakening consumer demand and rising operating costs begin to slow what was once a blistering expansion, according to a report.
Investors are increasingly questioning whether the rapid growth of recent years can be sustained in a market that has become crowded, intensely competitive, and more expensive to operate in.
Sales data toward the end of 2025 underscored the slowdown. Overall electric vehicle sales in China, the world’s largest EV market, failed to break out of a prolonged period of soft demand.
Among the most affected companies was Li Auto, which reported a sharp decline in deliveries. In November 2025, the company delivered just over 33,000 vehicles, a drop of nearly 32 percent compared with the same month a year earlier, raising concerns about how quickly demand is cooling even for well-known domestic brands.
A recent analysis highlighted deeper structural challenges facing China’s EV industry. Intense competition has eroded profit margins, while government support that once fueled growth is gradually being scaled back. At the same time, faster product cycles mean new models are launched so frequently that no automaker can sustain a clear competitive edge for long.
China’s largest electric vehicle manufacturer reflects many of these pressures. After years of rapid expansion supported by generous subsidies, analysts say the market is nearing saturation, with most buyers who were early adopters already having made the switch.
Sales remain heavily concentrated in major cities where charging infrastructure is well developed. In smaller towns and rural areas, limited charging access continues to make EV ownership impractical, restricting the pool of potential customers.
As a result, manufacturers are increasingly facing the challenge of converting first-time buyers into repeat customers, a process that traditional automakers have refined over decades through brand loyalty and after-sales networks.
The slowdown is already evident in recent figures. After posting strong growth last year, deliveries fell sharply in January, declining by roughly one-third compared with the same period a year earlier.
Across the industry, new electric vehicle sales dropped by nearly 20 percent, according to industry data, signaling that China’s EV boom may be entering a more difficult and less profitable phase. (Source: IANS)
