Top five hot trends in China’s EV market in 2025

Last year, Third Bridge published its report “How Chinese EVs are shaking up the global auto industry.”
The report summarised our interviews with industry experts, highlighting that Chinese brands hold strong advantages in pricing and software, while Western legacy automakers continue to lose market share in China’s Electric Vehicle (EV) market. Experts also noted that the international expansion of Chinese EV brands is unlikely to be slowed by tariffs imposed by the US and Europe, and that Western automakers will remain highly dependent on China’s supply chain, particularly in battery technology and rare earth materials.

According to the latest data released by Automobility Ltd^1, as of September 2025, domestic brands have continued to expand their dominance in China’s EV market, while foreign brands have stagnated.
Chinese brands now account for 68.8% of the domestic passenger car market, while foreign brands have lost one-third of their market share since 2020. At the same time, Chinese EV makers are shifting from export dependence to localised production and supply chains overseas, driven by tariffs, recycling fees, and other trade barriers.

Third Bridge and its experts continue to monitor the latest developments in China’s EV industry, including:

1. Price cuts fade, technology takes the lead

In May, BYD launched a “limited time fixed price” policy, triggering market fears of another EV price war in China. The policy was withdrawn in July. Subsequently, chaos emerged in the market for zero-kilometre used cars, attracting the attention of regulatory authorities.

"BYD’s policy was intended to clear dealer inventory amid slower sales, but it backfired by eroding dealer profits and disrupting market pricing. This did not deliver the expected boost in sales. Consumers who had already locked in higher prices felt short changed, triggering dissatisfaction and hesitation in future purchases, particularly as EV residual values remain low."

                                                   China’s 2025 New Energy Vehicle Market – BYD H2 Outlook – Dealers’ Perspective 

Third Bridge experts expect price stability to return in the second half of 2025, particularly as the Chinese government has pledged to tighten regulation on “irrational competition” in the EV sector². A minor year-end sales surge is expected before a new 5% purchase tax takes effect next year. Despite a high comparison base in Q4 2024 due to concentrated subsidy distribution, experts still project year-on-year sales growth of 5–8% in Q4 2025.

Competition is also expected to shift from price to technology, especially in driver assistance systems. Experts anticipate BYD’s “Gold’s Eye” (DiPilot) smart driving system will soon be integrated into more mid-range mass-production models without significantly increasing prices.

2. The rise of intelligent driving equality, is in house R&D overheating?

In February, BYD introduced its “Gold’s Eye” (DiPilot) system, extending advanced driver assistance beyond premium vehicles and sparking debate over the “democratisation” of smart driving. Within weeks, traditional Chinese automakers followed suit, Changan Automobile launched its own system on 8 February, and Chery unveiled its “Falcon Pilot” on 18 March, marking an acceleration of intelligent driving competition among legacy players.

Third Bridge experts note that China’s intelligent driving market is typically structured into three tiers:

• Top tier: Huawei, Li Auto, XPeng, and Momenta recognized as technology leaders.
• Second tier: Yuanrong, NIO, Xiaomi, DJI Automotive (Zhuoyu), Zeekr, etc.
• Third tier: Traditional automakers’ in house systems, generally progressing more slowly.

"Intelligent driving will eventually become homogenized and standardized."

                              Chinese Traditional Auto Manufacturers’ Intelligent Driving Solutions – Q3 2025 Update – Part 1

Experts say that NIO, XPeng, and Li Auto’s heavy investment in in-house smart driving R&D is largely aimed at supporting company valuations, positioning themselves more like AI firms developing automotive applications. Over the next three years, many legacy automakers are expected to scale back internal R&D and rely more on third party solution providers such as Momenta and Nvidia. Among legacy Chinese OEMs, Geely stands out as the automaker most likely to succeed in developing its own system. Beyond Geely, BYD, and the “new trio” (NIO, XPeng, Li Auto), most other carmakers now purchase and license algorithms from third parties for integration into their software. Experts believe it could take a decade or more for the industry to reach a mature, standardized stage of intelligent driving.

3. Xiaomi’s EVs thrive at home but can success go global?

Xiaomi officially entered China’s EV market in 2024, and its first model, the SU7, quickly attracted attention.

"Roughly half of SU7 buyers chose it without comparing other brands; another 30% had considered Tesla but switched to Xiaomi due to its design. More importantly, Xiaomi has expanded beyond its loyal ‘Mi fan’ base, attracting a wide range of non tech and former ICE vehicle users."

                                                                                                     Xiaomi Auto – H2 2025 Outlook – Dealer’s Perception

After a fatal accident in March and a misleading carbon fibre front hood ad scandal, SU7 orders plummeted in April and May. 

However, experts believe the real bottleneck lies in delivery delays, with lead times of up to 60 weeks for core models and even longer for the Pro version. Such long waits are expected to dampen consumer enthusiasm despite strong product appeal.

Soon after the successful launch of the SU7, Xiaomi launched its first SUV, the YU7, which received over 200,000 pre-orders within three minutes of release. Experts are optimistic that the YU7 could replicate or even exceed SU7’s success. The model will be a crucial test of whether Xiaomi can transition from tech savvy early adopters to the mass market EV segment. The main constraints remain production capacity and reputational risk. 

As a company originating from the 3C sector, Xiaomi enjoys clear advantages in supply chain management, digitalization, and cost control. Its “asset light” dealership model requires minimal marketing investment from dealers, relying instead on Xiaomi’s own retail and online ecosystem, an uncommon approach among traditional automakers. 

Experts note, however, that Xiaomi still lacks full stack expertise in chassis control and remains heavily reliant on founder Lei Jun’s leadership for long term success. 

While the company has found rapid success domestically, its global expansion plan, slated for 2027, faces uncertainties including regulatory hurdles, fierce competition, and the capital intensive nature of auto manufacturing.

4. EV safety incidents push new national battery standards to the spotlight

On 14 April 2025, China’s Ministry of Industry and Information Technology (MIIT) released a new national standard, GB38031 2025 “Safety Requirements for Power Batteries in Electric Vehicles.” ³The standard will apply to new vehicle applications from 1 July 2026, and to approved models from 1 July 2027.

"The new standard will accelerate industry consolidation towards top tier battery makers such as CATL and BYD, who are better positioned to absorb rising costs. In contrast, second tier firms such as Sunwoda, Farasis, and REPT may face profit pressure and heightened risk."

                                                                    CATL & China’s New National Power Battery Standards’ Industry Impacts

Experts believe the new rules will favour: lithium iron phosphate(LFP) batteries; increase the use of pressure relief valves, large liquid cooling plates, and thermal insulation between cells; and promote the adoption of smart BMS technologies.

The bottom impact test, simulating high-speed road debris or manhole collisions, will lead to higher ground clearance, reinforced underbody protection, and more robust design standards for battery packs.

5. From overcapacity to exports, Southeast Asia emerges as a key hub

With rising domestic competition and tightening margins, experts foresee a shift in China’s EV supply chain towards overseas production, especially in Southeast Asia. Chinese automakers are expected to expand along the Belt and Road and emerging markets before targeting Europe.

China’s “dual strategy” abroad combines price competition in low end models and premium branding in developed markets. For example, BYD’s Atto 3 now sells for 899,900 Thai baht (≈ RMB 180,000), down from over RMB 200,000 just two years ago. Meanwhile, brands such as Zeekr (Geely), Wey (Great Wall), Denza and Yangwang (BYD) are pursuing high end positioning in Europe and the Middle East.

Southeast Asia is becoming China’s gateway for EV exports, with leading automakers, BYD, Great Wall, SAIC, and GAC, establishing plants in Thailand and elsewhere. From these bases, vehicles can be shipped to Australia, New Zealand, South Africa, Europe, and Latin America. The region’s resources (for example Indonesia’s minerals) and well developed supply chains (for example Thailand’s EV ecosystem) offer additional advantages.

"Localization rates in Southeast Asia currently stand at 30 to 40%, expected to exceed 50% by 2026. As a result, costs for BYD and other Chinese automakers could fall by around 10%, improving profit margins by roughly 15 percentage points."

                                               Roundtable: Overtaking Tesla, BYD’s Overseas Expansion Creates New Opportunities

Nevertheless, experts caution against three major risks in overseas expansion: 

1. Trade protectionism, such as potential EU tariffs or minimum pricing policies targeting low cost Chinese EVs like the BYD Seagull and Dolphin. 
2. Weaker EV demand and declining subsidies, including in Europe and US, where incentive cuts are curbing new car sales. 
3. Production bottlenecks, as some overseas plants (for example BYD’s Mexico facility with 150,000 unit capacity) are not yet operational, keeping Chinese exports heavily reliant on domestic output and Chinese sourced components.

All insights in this article are based on information shared by Third Bridge experts.

^References:

^{1. https://coats-share-oiq.craft.me/d0WeRGzMB5LGk8}

^{2. https://www.reuters.com/business/autos-transportation/china-vows-regulate-irrational-competition-ev-industry-2025-07-16}

^{3. https://std.samr.gov.cn/gb/search/gbDetailed?id=31D72E7FB9BF92EDE06397BE0A0AC2E0#}

^{Transcript references:}

^{1. China’s 2025 New Energy Vehicle Market – BYD H2 Outlook – Dealers’ Perspective}

^{2. Chinese Traditional Auto Manufacturers’ Intelligent Driving Solutions – Q3 2025 Update – Part 1}

^{3. Xiaomi Auto – H2 2025 Outlook – Dealer’s Perception}

^{4. CATL & China’s New National Power Battery Standards’ Industry Impacts}

^{5. Roundtable: Overtaking Tesla, BYD’s Overseas Expansion Creates New Opportunities (Chinese Transcript Only)}