Penetration rate surpasses the 60% mark! China's new energy vehicles: "Involution" is not the way out; going overseas is the key to breaking the deadlock

This article is sourced from Times Weekly, written by Cao Yang.

As the domestic market stabilizes, technological capabilities leap forward, and supply chain systems continue to improve, China’s automotive companies are accelerating their global expansion. This unstoppable wave of overseas growth is reshaping the global automotive industry landscape.

Amid the surge, the phrase “going overseas” quickly became a high-frequency term in the industry. At the 2025 National Two Sessions, dozens of automotive representatives and committee members voiced their support for the industry.

From Changan Automobile (000625.SZ) Chairman Zhu Huari’s proposal to “build a common overseas market database and strengthen international standard alignment,” to Chery Holding Chairman Yin Tongyao’s call to “enhance export management systems and promote industry chain collaboration overseas,” “going overseas” has become an essential growth strategy for companies.

Data from the China Association of Automobile Manufacturers (CAAM) shows that in the first week of December 2025, retail penetration of new energy passenger vehicles in China surpassed 62.2%, with wholesale penetration rising to 64.3%. This marks China’s new energy vehicle penetration entering the “60% era,” a significant milestone in the industry’s transformation and upgrading process.

High penetration levels reflect the rapid development of China’s new energy vehicle industry and also indicate that the market has shifted from a “growth blue ocean” to a “stock red ocean,” with increasing competition expected in 2026.

CAAM forecasts that total vehicle sales will reach 34.75 million units in 2026, a slight increase of 1%. Meanwhile, “high sales and steady growth” has become the industry consensus for China’s automotive market outlook in 2026.

Against this backdrop, more domestic brands see overseas expansion as a key to breaking through. CAAM predicts that by the end of the “14th Five-Year Plan,” China’s overseas vehicle production and sales will exceed 12 million units.

Automakers accelerate their overseas expansion, with initial results emerging

CAAM data shows that in 2025, China’s vehicle exports exceeded 7 million units, reaching 7.098 million, a year-on-year increase of 21.1%. Among these, new energy vehicle exports totaled 2.615 million units, doubling compared to the previous year.

In 2026, despite steady growth in the domestic new energy vehicle market, exports continue to grow rapidly.

In January 2026, China exported 681,000 vehicles, a significant increase of 44.9% year-on-year, with a slight month-on-month decrease of 9.5%. This set a new record for January vehicle exports and continued China’s three-year streak as the world’s top vehicle exporter. Of these, exports of new energy vehicles reached 302,000 units, doubling year-on-year, with a 0.5% increase month-on-month.

Chen Shihua, Deputy Secretary-General of CAAM, stated that in January 2026, the overall automotive industry operated steadily, with passenger vehicle sales declining slightly, commercial vehicle markets remaining positive, and new energy vehicle markets stable. Vehicle exports continued to grow.

Behind the rapid growth in exports, various domestic automakers are also making continuous efforts.

According to CAAM statistics, among the top ten vehicle exporters in January 2026, nine companies achieved positive growth.

Chery’s exports reached 119,000 units, a 47.2% increase, accounting for 17.4% of total exports; BYD (002594.SZ) exported 100,000 units, ranking second; Geely became the most rapidly growing among the top ten automakers, with exports of 77,000 units, a 1.4-fold increase.

Notably, in December 2025, BYD’s new car registrations in Germany were more than twice those of Tesla. Annually, BYD’s sales in Germany increased sevenfold to 23,306 units, while Tesla’s sales dropped to 19,390 units.

Beyond traditional automakers, new car brands are also rapidly expanding overseas.

In 2025, Leap Motor (09863.HK) exported 67,000 vehicles, becoming a standout among new brands. In 2026, Leap Motor aims to sell over 100,000 vehicles abroad; Xpeng Motors (09868.HK) sold 45,000 units, a significant increase of 96% year-on-year.

Xpeng G7 (Photo: Times Weekly)

Additionally, “second-generation” brands like Zeekr, Denza, and GAC Aion also reached the 10,000-unit sales level overseas in 2025, showing initial scale.

Zhang Xiang, Secretary-General of the International Intelligent Transportation Technology Association, told Times Weekly that from the domestic market environment, once the industry enters a stock market phase, export has become an inevitable trend and choice for domestic automakers.

Global multi-market collaboration presents both opportunities and challenges

Senior automotive analyst Mei Songlin told Times Weekly that the saturation of the domestic market and improvements in the international environment are two core factors driving automakers to accelerate their overseas expansion.

Mei further analyzed, “Since the beginning of this year, domestic automotive growth has slowed, forcing automakers to shift focus to overseas markets and increase their overseas efforts. Meanwhile, China’s relations with Western countries are gradually warming, bilateral trade is further opening up, and the automotive industry is one of the main beneficiaries.”

Overseas expansion is now a necessary path. Chinese automakers are making comprehensive breakthroughs in Europe, Southeast Asia, Latin America, the Middle East, and Africa, with a trend of “multi-market flowering.”

Europe is the main battlefield for Chinese automakers’ high-end and branding strategies. Whether represented by traditional automakers like BYD and Chery or new brands like Leap Motor, NIO, Xpeng, and Xiaomi Auto, efforts are ongoing.

NIO models (Photo: NIO official website)

In 2025, BYD established its European headquarters in Hungary, marking a deepening of its European market presence; in June of the same year, NIO (09866.HK) announced plans to further expand its European operations in 2025 and 2026, including markets in Portugal, Greece, Cyprus, Bulgaria, and Denmark; in August, Xiaomi Group President Lu Weibing stated that Xiaomi Auto plans to enter the European EV market by 2027.

Along with the acceleration of overseas expansion, export models are shifting from early-stage single “vehicle exports” to “overseas manufacturing + capacity output.”

According to China Automotive News, over 10 overseas factories led by Chinese automakers have been officially put into operation, and more than 50 are in planning or construction stages.

Southeast Asia has become a key focus area. Data shows that eight Chinese automakers have established factories in Malaysia alone.

Additionally, SAIC Motor, Great Wall Motors, BYD, Aion, Chery, Geely, and Xpeng are also planning projects in Indonesia.

Yang Jing, Director of Asia-Pacific Corporate Ratings at Fitch Ratings, told Times Weekly that overseas manufacturing by Chinese automakers will promote the transition from export to localized overseas operations, which may, in the medium to long term, replace some vehicle exports.

Mei Songlin pointed out that while Chinese automakers are accelerating their overseas efforts, the greater the speed and strength, the more external resistance they face.

He further explained that Chinese automakers must actively integrate into local automotive industries and become part of their development to effectively mitigate external challenges.

“Of course, orderly and healthy competition in the international market is also key to long-term success abroad. This requires industry associations and relevant government departments to go global together, working with growing Chinese automakers to advance internationalization.”