As 2025 has just concluded, a lot has happened over the year. Leapmotor, which focuses on product and technology, has rarely been in the spotlight yet managed to achieve remarkable results. While founder IPs were highly popular in 2024, they now find themselves in a whirlpool of public opinion. Furthermore, "price cuts + intense competition" remains the main theme of the auto industry, with BBA engaging in significant discount promotions and Tesla experiencing a sales decline. This rapidly changing market landscape points directly to the rise of domestic new energy vehicles. The auto industry has successively announced its sales figures for the year, revealing a generally stable overall structure with BYD still holding a dominant position, while changes have occurred in some local market shares. Leapmotor emerged as the biggest dark horse among the new automakers, but while some rejoice, others worry, as sales of some traditional joint-venture brands have entered a bearish trend.
According to sales figures released by major automakers, BYD secured the top spot with sales of 4.6024 million vehicles, maintaining a far-leading position in monthly new energy vehicle sales. Leapmotor became the leader among new automakers with sales of 597,000 vehicles, consistently topping the monthly sales charts since March 2025 and holding the sales crown for 9 consecutive months. Additionally, new players represented by Harmony Intelligent Driving Alliance and Xiaomi Auto have seen their sales stand out prominently among the new automakers. Behind these sales figures lies a comprehensive reflection of multi-dimensional factors such as product strength and marketing power. However, according to the China Passenger Car Association, the retail penetration rate of new energy vehicles in the first 11 months has already exceeded 50%, with growth rates tending to slow down on a high base, and the market pie is also shrinking. The "Three Expectations" have become the key to victory for automakers in the "final competition stage."
The industry landscape is a mix of positive and negative news, tending towards stability. Looking at the overall sales figures for December, major automakers had mixed fortunes. On one hand, new automakers generally saw sales growth: Leapmotor sales reached 64,000 units, an increase of 42.11%; NIO sales reached 48,100 units, growing by 54.6%; and Xiaomi exceeded 50,000 units, with growth surpassing 100%. On the other hand, the situation for traditional automakers is not optimistic, with the former leader, SAIC Motor, experiencing a sales decline of 17.3%, including a sharp 32.4% drop in sales for SAIC Volkswagen.
Looking at full-year sales, most automakers achieved sales growth. Among traditional automakers, BYD held a far-leading position in sales volume, while Geely Auto led its peers with a growth rate of 39%. New automakers generally saw substantial growth: Leapmotor grew by 103.1%, XPeng grew by 125.94%, NIO grew by 46.9%, and Xiaomi grew by over 200%. Li Auto, due to a high base from the previous year and a gap in its product cycle, saw sales decline by 19%.
In terms of new energy vehicle sales, among traditional automakers, aside from BYD, others are accelerating their transition to new energy. For the full year 2025, SAIC Motor's new energy vehicle sales reached 1.643 million units, a year-on-year increase of 33.12%, with a penetration rate of 36.45%. Geely Auto's new energy vehicle sales were 1.6878 million units, surging 90% year-on-year, achieving a penetration rate of 55.78%. Changan Automobile's new energy vehicle sales reached 1.11 million units, up 51.1% year-on-year, with a penetration rate of 38.1%. Although new automakers' sales grew rapidly, they still lag behind traditional automakers in absolute terms. It is worth noting that, under the siege of domestic new energy vehicles, the overseas automaker Tesla faced setbacks, with global sales of 1.6361 million units, down 8.6% year-on-year. Its sales in the Chinese market were just over 600,000 units, with its market share continuing to decline.
The structure of the new energy vehicle industry is tending towards stability, but three major directions for new energy vehicles are clearly visible: first, intelligent driving, with recent approvals for the first batch of conditional L3-level autonomous driving models, indicating that the commercial application of L3 autonomous driving is imminent, which will bring new momentum to the consumer market; second, the demand for long range, with the widespread adoption of 800V platforms enabling a standard range of 800 km, and solid-state batteries also expected to enter production; third, exports, which have seen sustained significant growth since the second half of 2024 and have become a crucial battleground for major automakers competing for market share.
Amid the wave of AI development, the computing and reasoning capabilities for intelligent driving have reached the L3 level. In December 2025, the Ministry of Industry and Information Technology officially announced China's first approvals for conditional L3-level autonomous driving models, which included the Changan brand SC7000AAARBEV pure electric sedan and the Arcfox brand BJ7001A61NBEV pure electric sedan. XPeng also obtained an L3 autonomous driving road test license. Driven by policy and the release of diverse scenarios, unmanned driving is gradually penetrating various fields, including private cars, taxis, and mining trucks, further expanding the market space for new energy vehicles.
Long range has become one of the essential standards for car buyers. The reason extended-range electric vehicles and plug-in hybrids sell well is primarily because they address the demand for long-distance driving. Currently, the standard range generally exceeds 800 kilometers, and most models are equipped with 800V systems, significantly improving charging speed and alleviating range anxiety, which can attract some consumers looking to switch from gasoline cars. Furthermore, solid-state batteries offer superior charging performance and range, and efforts are intensifying both domestically and internationally. In January of this year, the Finnish tech pioneer Donut Lab made headlines with the world's first mass-production grade all-solid-state battery, while several Chinese automakers have announced upcoming mass-production models. By the end of 2025, China had already accumulated 14,400 patents related to solid-state batteries.
Regarding overseas expansion, new energy vehicle exports were exceptionally strong in 2025. Led by BYD and Chery as representatives of domestic new energy vehicles, exports saw substantial growth, with the full-year export growth rate exceeding 90%. Chery's export volume in 2025 was 1.344 million units, a year-on-year increase of 17.4%, maintaining its position as the top exporter of Chinese passenger car brands for 23 consecutive years. BYD followed closely, with cumulative overseas sales of passenger vehicles and pickup trucks reaching 1.0496 million units for the year, a surge of 145% year-on-year.
For automakers, seizing these three major expectations and rapidly increasing market share is key to securing a stable industry position. However, although most new automakers are experiencing high growth, they remain in a loss-making state, making cash flow the most critical development indicator. The more abundant the cash flow, the higher the chance of success in the final competition stage. Currently, Leapmotor has achieved profitability and boasts strong cash flow, with operating cash flow consistently showing a net inflow, giving it a leading position in this aspect compared to its peers.
Of course, 2026 still presents significant challenges. On one hand, the purchase tax subsidy for new energy vehicles is set to be phased out, coupled with uncertainty regarding the subsidy amounts under two new policies, which may lead to more intense market competition. On the other hand, price wars are accelerating market consolidation. Automakers with weaker product strength and market positioning will gradually be eliminated, leaving the survivors as winners.
The current industry structure is relatively stable, characterized by BYD's dominance and Leapmotor leading the pack among new automakers. From an investment perspective, the auto industry experienced a rise followed by a decline in 2025 and is currently in an adjustment cycle. The valuations of some targets have fallen into a "golden pit," and the three major expectations for new energy vehicles are driving valuation upgrades.
As the global leader in new energy vehicles, BYD holds high investment value. The company's layout across the entire industry chain provides cost control flexibility in the face of rising upstream material prices. Its leading position in terminal vehicle sales is solid and difficult to shake, and its overseas growth is rapid, having become one of its core growth drivers. According to views from major investment banks, Daiwa expects its overseas sales to reach 1.5-1.6 million units in 2026, a year-on-year increase of 60%-80% compared to 2025, potentially reaching 2 million units under optimistic scenarios. The core growth drivers are still expected to be Southeast Asia, Europe, and South American markets.
Leapmotor is the leading player among new automakers, having held the monthly sales crown for 9 consecutive months, showing an unstoppable momentum. Focusing on SUVs for young people, its main B-series and C-series models have become blockbuster products in the market. Its overseas expansion is also accelerating, solidifying its position as the leading new automaker in exports from China, and it is one of the few profitable players in this segment. A Bank of America Securities research report pointed out that, based on stronger sales growth and overseas expansion, benefiting from a robust vehicle model cycle and its partnership with Stellantis, their target price for Leapmotor is HK$90, nearly double the current price.
Additionally, XPeng Motors has also received positive outlooks from several investment banks. For instance, a Soochow Securities research report indicated that XPeng's C-end strategy focuses on "extended-range + overseas expansion," leveraging its ability to produce batch blockbusters to accelerate globalization. For the B-end, it aims to tap into the trillion-yuan Robotaxi market with its advantages in front-loading mass production and fully self-developed technology. Furthermore, its robot IRON achieves a fusion of "bionics + AI," with commercial pilot projects scheduled to start in 2026, and its flying car A868 is also planned to begin deliveries in the second half of 2026. The company possesses multiple advantages but its multi-business models are still not profitable, and their commercialization still requires market validation.
Overall, 2025 was a year of mixed fortunes for the auto industry. The rapid development of AI and the popularization of intelligent driving have led to unprecedented development for domestic new energy vehicles, continuously squeezing the survival space of joint-venture brands. However, industry competition remains extremely fierce, and no one wants to follow in the footsteps of WM Motor, Neta Auto, and Jiyue. Facing an even more competitive environment, the three major expectations—intelligent driving, range, and overseas expansion—have become the focal points for business development among major automakers. With policy paving the way and market expectations opening up, the battle will reveal the strongest players. In 2026, the new energy vehicle industry will undoubtedly remain one of the market's most closely watched themes, with investment opportunities in undervalued leaders warranting attention.
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