China’s sales of new energy vehicles (NEVs) declined year-on-year in February for the first time in nearly two years, reflecting weaker domestic demand even as exports from the world’s largest electric vehicle market continued to rise sharply.
According to the China Association of Automobile Manufacturers (CAAM), manufacturers operating in China sold 765,000 NEVs in February, a category that includes battery-electric vehicles, plug-in hybrids and fuel-cell vehicles. The total represented a 14.2% drop compared with February 2025 and a 19.1% decline from January 2026.
Domestic demand accounted for much of the downturn. NEV sales within China reached 483,000 units, down 36.5% year-on-year and 24.9% lower than in January. The level marked the lowest monthly domestic NEV sales since February 2023.
Seasonal factors often weigh on vehicle demand early in the year in China, when sales typically slow following year-end peaks and the country’s largest holiday period. This year’s Chinese New Year fell on Feb. 17, amplifying the seasonal lull. However, analysts suggest additional factors contributed to the unusually steep drop.
The portal CN EV Post reported that the removal of tax incentives for NEV purchases may have dampened demand. Since the start of 2026, buyers of electric vehicles in China must pay a vehicle purchase tax of 5%.
While the domestic market weakened, exports continued to grow rapidly. NEV shipments abroad reached 282,000 units in February, more than doubling from 131,000 units a year earlier. That represented a 115% increase year-on-year, though exports were 6.6% lower than in January, a pattern observed in previous years before exports typically rebound in March.
China’s overall automotive market also contracted. Wholesale vehicle sales totalled 1.805 million units in February, down 15.2% compared with the same month last year and 23.1% lower than January. Exports reached 672,000 units, up 52% year-on-year and only slightly lower than January.
NEVs accounted for 42.4% of China’s total vehicle market in February, compared with 40.3% in January. The share remained well below the levels seen late last year, when NEVs made up 53.2% and 52.3% of sales in November and December respectively. For the full year 2025, the share stood at 47.9%.
Among powertrain types, battery-electric vehicles led with 484,000 units sold in February, down 10.9% year-on-year and 18.9% from January. BEV exports, however, climbed sharply to 174,000 units, a 120% increase compared with the same month last year.
Plug-in hybrid vehicles also declined domestically, with sales of around 280,000 units in February, down 19.4% year-on-year and 19.5% from January. Overseas shipments of plug-in hybrids doubled year-on-year to 107,000 units.
The slowdown in China’s domestic NEV market has affected leading manufacturers including BYD. The automaker reported sales of 190,190 battery-electric and plug-in hybrid vehicles in February, a drop of 41% from the previous month.
February also marked the first time BYD’s overseas sales exceeded those in China, as the company continues expanding exports amid growing competition and softer demand in its home market.