China’s Booming NEV Market in H1 2025 Faces Industry Reshuffle

Chongqing - China’s new energy vehicle (NEV) production and sales reached 6.968 million and 6.937 million units in H1 2025, up 41.4% and 40.3% year-on-year, respectively, with NEVs accounting for 44.3% of all new car sales nationwide, according to the China Association of Automobile Manufacturers.

EV explosion in China—but only the strong endure

In the final assembly workshop of Seres' Super Factory in Chongqing Liangjiang New Area, robots actively work. (Photo/Wang Jiaxi)

The data reflect a rapid expansion of China's domestic market for the NEV industry. According to the 2025 Global Automotive Outlook released by AlixPartners, amid disruption in the global auto sector, China’s leading NEV manufacturers are not only demonstrating resilience but also emerging as key drivers of global transformation.

However, as the overall market expands, competition is intensifying. AlixPartners forecasts that China’s NEV market will undergo consolidation as it matures, with only the most competitive brands expected to survive. Of the 129 NEV brands operating in 2024, only 15 are projected to achieve financial viability by 2030, collectively capturing approximately 75% of the market share.

In 2023, 137 NEV brands in China had sold at least one vehicle. By 2024, that number had declined to 129. Many of these had annual sales below 1,000 units—effectively exiting the competitive landscape. Meanwhile, the number of brands with over 100,000 units in annual sales continues to grow, signaling a steadily rising market concentration.

Looking at company-specific performance in H1 2025, Changan Automobile—which is set to become a newly established center-owned automaker—achieved 450,000 units in NEV. Seres, another Chongqing NEV company with its main NEV brand Aito, which is in Chongqing Liangjiang New Area, sold 172,108 NEV units. Nio, one of China’s earliest NEV pioneers, recorded sales of 114,150 units. Li Auto and Xpeng, peers in Nio’s cohort, posted sales of 203,758 and 197,189 units, respectively. Despite being less than four years old, Xiaomi Automobile reached 157,926 units in sales, drawing market attention.

Given the strong economies of scale in the automotive industry, AlixPartners asserts that NEV makers must exceed annual sales of one million units to achieve sustainable operations. By 2030, each of the 15 surviving major brands is expected to average 1.02 million in annual sales. For example, BYD, China’s NEV market leader, has already surpassed this threshold with 2.137 million units sold in H1 2025, setting the benchmark for the rest of the industry.

Profitability divides China’s NEV makers

Profitability presents another major challenge for China’s NEV sector. According to China Automotive News, Stephen Dyer, AlixPartners’ Asia automotive practice leader, noted that China is the world’s most competitive NEV market. Intense price wars, rapid technological evolution, and constant new entries are raising the bar for all players. While this environment fosters innovation and cost efficiency, it also makes sustainable profitability elusive for many companies.

Seres stands out as a profitable example. The company began NEV development in 2016 and remained unprofitable until it collaborated with Huawei, a Chinese technology giant. Since launching the Aito series, Seres has significantly improved its financial position.‌ According to its financial reports, the net profit attributable to shareholders reached 5.95 billion yuan in 2024, marking a significant turnaround from a loss of 2.45 billion yuan in 2023.

In H1 2025, Seres maintained solid profitability performance. According to Seres' latest preliminary earnings forecast, the company expects net profit attributable to shareholders to range between 2.7 billion and 3.2 billion yuan, up range between 66.20% and 96.98% year on year.

The growth is mainly attributed to the launch of new models, including the Aito M9 2025 version and Aito M8, which boosted Q2 sales and enhanced overall profitability. The release of the Aito M9 further positioned the company in China’s 500,000-yuan (69,706 USD) luxury segment, with sales outperforming established brands such as Mercedes-Benz, BMW, and Audi.

In contrast, Nio exemplifies the challenges of unprofitability. Despite over a decade in operation, the company has accumulated more than 100 billion yuan in losses. Its Q1 2025 financial report showed revenue of 12.03 billion yuan—up more than 21% year on year—with a gross vehicle margin of 10%. However, it also reported a net loss of 6.89 billion yuan, alongside R&D spending of 3.18 billion yuan.

According to Jiemian News, following the release of its Q1 financial report, Nio’s founder, chairman, and CEO William Li made a rare admission during a closed-door media briefing that the company’s operations had not met expectations over the past three years. He remarked that if the company fails to achieve profitability and sustainable development, his role as CEO would be “incompetent.”

Speaking at the China EV100 Forum 2025, Li explained that Nio’s losses stem largely from sustained investments in R&D and its power-swap infrastructure. In a livestream event in early July, he reiterated Nio’s commitment to technological innovation, noting that cumulative R&D investment had reached 60 billion yuan. In 2024 alone, R&D expenditure was 13.04 billion yuan, higher than Li Auto’s 11.07 billion yuan and Xpeng’s 6.46 billion yuan.

Nio’s unique battery swap strategy is a key source of its capital expenditure. The system enables vehicles to replace depleted batteries in 2 to 11 minutes, ensuring rapid energy replenishment. To support this model, Nio has invested heavily in infrastructure.

"Over the past decade, Nio has invested a cumulative total exceeding 18 billion yuan in battery swap and charging infrastructure development, stated Li on the launch event of the product. Comparatively, Nio spent merely 3.16 billion yuan to acquire the factory from JAC Motors.

At Nio's second factory, a batch of new energy vehicles is undergoing inspection on the production line in preparation for rollout. (Photo/Zhou Mu)

Despite mounting losses, Li remains optimistic about the company’s outlook. In the same livestream, he highlighted that Nio is the only automaker listed on three major exchanges globally. He emphasized that its financial reports account for R&D costs as current expenses, making losses transparent and its balance sheet structurally sound. He also reaffirmed the company’s goal of achieving profitability in the fourth quarter of this year.

The launch of the new L90 model under Nio’s sub-brand Onvo brings the company closer to this target. The L90 is positioned as a six-seat family SUV, priced from 279,900 yuan, or 193,900 yuan with Nio’s battery subscription plan. This is lower than competing extended-range SUVs such as the Li Auto L9 and Aito M9, which are priced at 400,000 to 500,000 yuan. Following the launch, investor sentiment improved. On July 15, Nio’s Hong Kong-listed shares closed at HKD 33.60, up 3.86%.