China’s electric vehicle industry, once hailed as the vanguard of a green revolution, is now grappling with a severe downturn that could reshape the global automotive landscape. What began as a government-fueled surge in EV production has morphed into a crisis of overcapacity, plunging prices, and mounting losses for manufacturers. Recent data shows that while EV sales in China hit a milestone with nearly half of new car sales being electric, the underlying market dynamics reveal a more troubling picture.

According to The Atlantic, Beijing’s ambitious push for EVs has led to an implosion, with the market threatening to drag down the entire global car industry. The article highlights how state subsidies and mandates created a bubble that’s now bursting, forcing companies to slash prices in a brutal price war.

The Overcapacity Trap

China’s EV sector is drowning in excess production capacity. Factories built during the boom years are now operating far below potential, leading to inefficiencies and financial strain. Visual Capitalist reports that electric vehicles now make up nearly half of new car sales in China, with internal combustion models in decline, as of their November 4, 2025, chart analysis (Visual Capitalist).

However, this apparent success masks deeper issues. CNN Business notes a cut-throat price war at home that could kill off many brands, with officials decrying ‘disorderly’ competition extending beyond EVs to other sectors (CNN Business). The Guardian adds that Chinese manufacturers are pushing into Europe, using the UK as a gateway amid this domestic turmoil (The Guardian).

Price Wars and Profit Woes

The intense competition has driven EV prices to record lows, eroding profit margins. Reuters reports that global EV sales growth hit 23% in October 2025, but in China, price parity with internal combustion engine vehicles is much closer than in Europe or North America, according to Rho Motion data manager Charles Lester (Reuters).

Economic Times India highlights an unexpected decline in China’s overall car sales in October 2025, ending an eight-month growth streak due to weakening consumer sentiment and reduced subsidies (Economic Times India). This contraction has intensified competition, particularly among EV makers.

Subsidy Pullback Signals Shift

China’s government is signaling an end to generous EV subsidies, a move that could accelerate the market shakeout. Reuters details how a five-year plan excludes further subsidies, aiming to address vast oversupply after years of support (Reuters).

The International Energy Agency’s Global EV Outlook 2025 notes trends in electric car markets, projecting continued growth but warning of challenges in sustaining momentum amid policy changes (IEA). CnEVPost, a key source for China EV insights, covers ongoing developments in EVs, batteries, and related tech (CnEVPost).

Global Ripple Effects

The fallout from China’s EV implosion is spilling over internationally. CNBC describes how China’s EV juggernaut is reshaping the global car market, catching many off guard with its speed (CNBC).

Posts on X from users like Erik Solheim celebrate China’s projected EV sales surpassing gasoline cars in 2025, with over 12 million electric vehicles expected, positioning China as a green leader. However, other X sentiments, such as from Mario Nawfal, note cooling export growth to 5.8% in 2025 due to EU tariffs, with electric car exports dropping 10.4% while hybrids surge 190%.

Industry Leaders Under Pressure

Major players like BYD are navigating this storm, holding a 26.7% market share as per X posts citing September 2025 records, where nearly 50% of vehicle sales were electric, with 1.6 million NEVs sold and 222,000 exported. Caixin Global reports that electric cars outsold gas-powered ones in October 2025 at 51.6% share, but subsidy uncertainty and price wars threaten momentum (Caixin Global).

OpenPR projects the global electric vehicles market to grow from $457 billion in 2024 to $1,850 billion by 2034 at a 14.1% CAGR, with key players including Nio, Rivian, and Lucid Motors (OpenPR). Yet, in China, the focus is on survival amid oversupply.

Regulatory and Supply Chain Dynamics

Supply-side regulations have driven EV adoption, with over 50% of new car sales being EVs by mid-2025, up from 6.3% in 2020, as noted in X posts. Tesla Mag discusses rising stars and market dynamics in China’s EV sector for 2025 (Tesla Mag).

X posts from OzBandit highlight that 51.6% of new cars sold in October 2025 were NEVs, with BEVs surging 31.7% year-over-year to 1.1 million units, signaling a majority electric market. ChinaBiz Insider points to a shift where tech giants and suppliers battle for ecosystem dominance in smart mobility.

Innovation Amid Crisis

Despite the challenges, innovation persists. Financial Times reported in December 2024 that EVs are expected to outsell ICE vehicles in China for the first time in 2025, years ahead of Western rivals (Financial Times).

James Graham on X notes that EVs are cheaper than ICE vehicles in China due to plummeting battery prices and competition. This cost advantage is driving adoption but also contributing to the price wars that are squeezing margins.

Future Outlook and Strategic Pivots

As the market evolves, companies are pivoting to hybrids and exports to mitigate domestic pressures. S&P Global Mobility, as cited in X posts, projects EVs to make up nearly 30% of China’s auto market in 2025, surpassing ICE sales.

Historical projections from JP Morgan, shared on X, anticipated EV penetration reaching 25% by 2025, a mark already exceeded, underscoring the rapid but volatile growth. The path forward will depend on balancing innovation with sustainable economics.