China's NEV Share Crossed Half of New Car Sales in 2025

A Threshold Finally Crossed

In 2025, China's new car market quietly completed a transformation that would have sounded far-fetched only five years ago. According to the China Passenger Car Association (CPCA), new energy vehicles — battery electrics, plug-in hybrids and range extenders combined — accounted for 53.9 percent of all passenger cars sold at retail in China last year, the first full year in which electrified models outsold conventional gasoline and diesel cars in the segment. The China Association of Automobile Manufacturers (CAAM) put the domestic-market NEV share of all vehicle sales at 50.8 percent for the year, with the passenger-car portion reaching roughly 54 percent.

The milestone matters beyond the symbolism. China is the world's largest auto market, so when fuel cars become the minority there, the effect ripples through global supply chains, battery investment and automaker product plans. What was still a policy-nurtured niche in the late 2010s is now the default choice for a majority of Chinese new-car buyers.

The Numbers Behind the Milestone

CAAM data show that NEV sales in China reached 16.49 million units in 2025, up 28.2 percent year on year, within a total vehicle market of 34.4 million units that grew 9.4 percent. Counting exports as well as domestic sales, NEVs took 47.9 percent of total vehicle sales for the year, a gain of seven percentage points over 2024 — with the domestic-only share crossing the 50 percent line.

The retail picture compiled by CPCA tells the same story at the showroom level. Passenger-car NEV retail sales totaled 12.81 million units out of 23.74 million passenger vehicles sold, and the composition is increasingly dominated by pure electrics: battery-electric retail sales reached 7.88 million units, up 24.4 percent, while plug-in hybrids added 3.40 million, up 8.8 percent, and range extenders 1.17 million, up 6 percent, according to CPCA figures cited by independent market analysts. Battery-electric models alone made up roughly 61.5 percent of NEV retail volume.

A Second Half of Monthly Records

The full-year averages understate how decisively the market tipped in the second half of 2025. Monthly retail penetration topped 50 percent repeatedly from mid-year onward, and in December the CPCA reported that NEVs took 59.1 percent of passenger-car retail sales, up 9.6 percentage points from December 2024 — a new monthly record as buyers responded to year-end promotions and the final months of generous purchase-tax relief.

December also offered a preview of a slower 2026. Total vehicle sales fell 6.2 percent year on year that month as the trade-in push faded, even though NEV sales still managed 7.2 percent growth, per CAAM. The fuel-car side of the market no longer has that kind of tailwind.

Battery electrics did the heavy lifting late in the year. Battery-electric retail sales reached 782,000 units in December — 58.5 percent of the month's NEV total, according to CPCA figures — even as overall passenger-car retail fell 14 percent year on year. In other words, the combustion segment absorbed nearly all of the December decline. That pattern held through the second half: industry analyses of CPCA monthly releases noted that NEV retail penetration stayed above 50 percent for five consecutive months after mid-year, while retail sales of non-electrified passenger cars fell about 9 percent for the full year. Fuel cars were not merely losing share; they were losing volume outright.

Policy Made the Difference

Two policy levers did much of the heavy lifting. The national vehicle trade-in and scrappage program, expanded in 2024 and 2025, paid consumers to replace older cars with new ones — with a premium for NEVs. At the same time, New Energy Vehicles enjoyed an exemption from the 10 percent vehicle purchase tax, a benefit that conventional cars never received. CAAM deputy secretary-general Chen Shihua credited the trade-in program and tax relief with unlocking replacement demand and keeping the market growing through the year.

That support is now being dialed back. The purchase-tax exemption was halved starting in 2026, and CAAM expects NEV sales to grow 15.2 percent to 19 million units this year — solid, but a clear step down from 2025's 28 percent surge. The association forecasts total vehicle sales of 34.75 million, up just 1 percent, signaling that the easy phase of electrification in China is largely complete.

Fuel Cars Become the Minority

The flip side of NEV growth is a shrinking combustion market. CAAM data show domestic sales of conventional fuel vehicles fell 4 percent in 2025 to 13.43 million units, and the pressure is falling hardest on brands that arrived late to electrification. Honda's China sales dropped 24.3 percent to about 645,000 vehicles, while FAW-Volkswagen deliveries slid 4.3 percent. Chinese-branded passenger cars, meanwhile, captured 69.5 percent of the home market, up 4.3 percentage points, according to CAAM — with electrified lineups doing most of that damage.

Plug-in hybrids and range extenders proved to be the decisive bridge technology. By offering home charging for commuters and fuel-free highway flexibility, they pulled in buyers who were not ready for a pure battery car, then pushed the overall NEV share past the point where showroom perception flipped. With more than three out of ten NEV sales now carrying a gasoline generator or engine as a backup, the "either/or" framing of electrification has largely dissolved in the Chinese market.

Exports Turn Electric Too

Electrification is also reshaping what China ships abroad. NEV exports doubled to 2.62 million units in 2025, according to CAAM, including 1.65 million battery electrics, up 66.7 percent, and 969,000 plug-in hybrids, up more than threefold. Total vehicle exports rose 21.1 percent to 7.09 million units, keeping China the world's largest auto exporter for a second straight year, with BYD alone shipping 1.05 million vehicles overseas.

China has now been the world's largest NEV market for eleven consecutive years, and 2025 will be remembered as the year the transition stopped being a forecast and became a fact on the ground. The question for 2026 and beyond is no longer whether Chinese buyers will choose NEVs, but how quickly the rest of the world's markets follow — and whether the domestic price war that helped push shares past 50 percent can cool without stalling the momentum.