China EV market projected to hit $784.6B by 2035

China’s electric vehicle market is forecast to grow from an estimated $197.3 billion in 2025 to $784.6 billion by 2035, even as domestic sales soften in the near term. The outlook is being driven by policy support, fast-moving battery technology, and surging exports that keep China at the center of the global EV industry.

Why it matters: - China remains the largest electric vehicle market in the world and a key engine for global auto supply chains. - The market’s projected growth to $784.6 billion by 2035 shows how EV demand, battery manufacturing, and exports are reshaping the industry. - Battery electric vehicles hold about 72% of the market, underscoring how quickly pure EV adoption is outpacing hybrids and fuel-cell models.

What happened: - The China Electric Vehicle Market reached an estimated $197.3 billion in 2025. - The market is forecast to start 2026 at $226.5 billion and grow at a 14.8% CAGR through 2035. - Total market value is projected to reach $784.6 billion by the end of the forecast period. - Domestic production exceeded 9.5 million BEVs and more than 4.5 million PHEVs in 2025. - NEVs accounted for 67.2% of domestic passenger car sales in June 2026. - NEV production reached 1.598 million units in June 2026, up 26% year on year. - NEV sales reached 1.643 million units in June 2026, up 23.6% year on year. - The first half of 2026 saw EV deliveries fall 13% year on year to 4.73 million units. - NEV exports reached 523,000 units in June 2026, up 160% year on year. - Total auto exports in the first half of 2026 reached 5.096 million units, up 65.3%, with NEVs making up more than 46% of the total.

The details: - The market spans BEVs, PHEVs, and FCEVs, along with batteries, charging equipment, software platforms, and related infrastructure. - Beijing’s carbon goals and the State Council plan for NEVs to account for 50% of new vehicle sales by 2035 continue to support demand. - The Ministry of Finance extended the NEV purchase-tax exemption through December 2027, with a phased reduction to 50% exemption in 2028-2029. - Beijing halved the preexisting sales tax exemption on January 1, 2026, leaving EV buyers subject to a 5% sales tax. - The government will cancel the annual vehicle and vessel tax exemption for NEVs on January 1, 2027. - Provincial incentives, license-plate lottery exemptions in major cities, and charging buildouts remain demand supports. - BEVs hold about 72% market share, helped by lower pack costs and driving ranges above 600 km. - Pure electric vehicles accounted for 67% of total NEV sales in the first half of 2026. - PHEVs are growing at an 18.3% CAGR as buyers in lower-tier cities prefer dual-powertrain flexibility. - FCEVs were valued at about $4.1 billion in 2025 and are concentrated in heavy-duty trucking corridors in northern provinces. - Passenger vehicles account for roughly 82% of market revenue. - Commercial vehicles are growing at a 16.2% CAGR, while light commercial vans are rising at an 18.2% CAGR. - Medium- and heavy-duty trucks are posting the fastest application growth at 19.7%. - LFP batteries hold 67% market share, supported by cell-level costs below $55/kWh, thermal stability, and domestic supply. - NMC batteries remain important in the premium segment, which was valued at $52.3 billion in 2025. - Sodium-ion batteries are growing at a 42.5% CAGR, and solid-state batteries are advancing at 38.2% CAGR. - East China accounts for about 38% of total market value. - South China, led by Guangdong, produces more than two-thirds of South China’s EV output. - North China benefits from Beijing’s NEV-exempt license-plate lottery rules. - Central China is being reshaped by Dongfeng’s shift away from internal-combustion platforms. - Southwest China is gaining on lithium reserves and low-cost hydropower. - The top five players account for an estimated 48% to 54% of domestic NEV revenue. - BYD leads the market with an estimated 28% to 32% revenue share and 4.6 million total sales in 2025. - Tesla (China) holds an estimated 8% to 10% share, with Model 3 and Model Y production at Giga Shanghai. - SAIC Motor, Geely-Zeekr, Li Auto, NIO, XPeng, Changan, Great Wall, and Wuling round out the major competitive set. - At least 15 EV startups shut down between 2023 and 2025. - Chinese automakers are expanding overseas, including BYD sites in Hungary and a Brazilian plant expected to reach 600,000 annual vehicle capacity in the second half of 2026. - Leapmotor International had exported more than 100,000 vehicles to 40 countries by February 2026.

Between the lines: - The market is still growing, but the easy phase of policy-led expansion is fading. - Lower domestic deliveries, a price war, and overcapacity are squeezing margins, especially for smaller brands. - Only three Chinese EV assemblers — BYD, Leapmotor, and Xiaomi — are profitable at present. - Export growth is becoming a bigger pressure valve for excess supply and a bigger source of scale for leading brands. - Technology is moving from premium models into mainstream vehicles, which raises competitive pressure across China and abroad.

What's next: - Solid-state battery commercialization is targeted for 2027-2028, with energy density expected to exceed 350 Wh/kg. - Vehicle-to-grid and energy services could provide 50 GW of dispatchable capacity by 2032. - Autonomous driving software subscriptions could generate $18 billion to $25 billion annually by 2032. - Battery recycling could add $12 billion in incremental opportunity by 2030. - Battery costs are projected to fall below $75/kWh by 2027. - Chinese brands are expected to keep expanding abroad while adding more advanced driver-assistance features to lower-priced models.

The bottom line: - China’s EV market is moving from policy stimulus to scale, exports, and technology competition, keeping the country at the center of the global shift to electric mobility. - More information