1. Increasing bankruptcy
Around a third of all the new start-up companies will go bankrupt due to the ongoing price war and continued domination of BYD in the new energy vehicle (NEV) market. In China NEV is the term given to both all-electric and PHEV cars. Neta will be one of the largest names and it will fail in the first half of 2025. This follows on from the collapse in 2024 of companies such as Jiyue and HiPhi.
2. Increasing electrified vehicle penetration
The NEV penetration rate for 2025 will be between 55% and 60%. Although sales will most likely fall in the first few months of the year, with Chinese New Year on January 29, they will begin to pick up from the second quarter and accelerate in the second half of the year. Although there may be the odd month where the penetration rate dips below half, most months will be over, and the rate will increase as sales increase in H2.
3. SAIC tries to buy its way out of trouble
SAIC’s increasingly desperate situation will push it to go shopping in an attempt to stay relevant. This has been brought about by the collapse in sales in the General Motors joint venture, precarious sales with the Volkswagen joint venture, and declining sales in its own brands. SAIC is currently reliant on the Wuling joint venture for sales, particularly in terms of NEVs, but the problem is most of the Wuling models are low-priced, meaning limited profits. SAIC will try to buy a more successful new entrant to gain sales and profits. Xpeng, in which VW already has a stake, might be a candidate.
4. SOE mergers
There will be a merger, possibly forced, between some of the state-owned enterprises (SOEs) that are not doing so well. Likely candidates on the list are FAW, Dongfeng, BAIC and GAC. A merger between FAW and BAIC is the most likely and would help the two companies, which have falling sales from their joint ventures and are currently struggling with meaningful NEVs.
5. More joint ventures fold
At least three joint ventures will cease in 2025. The most likely candidates are Hyundai, Jaguar Land Rover, Ford, and General Motors. Most JVs are struggling and have much lower NEV sales penetration rates than the majority of the Chinese brands. With the shift away from ICE cars in the Chinese markets this will mean they have an increasingly tough situation.
6. JVs turn to Chinese EV tech
Related to this at least one JV brand will choose to use the new CATL Bedrock skateboard chassis or the Huawei HarmonyOS and Qiankun ADAS system to try to create a credible NEV offering for the Chinese market. If the CATL Bedrock system is adopted by one, this may also become an export model.
7. Lexus copies Tesla in China
Lexus will announce and start building a factory in Shanghai. This follows rumors in July 2024 which were denied and further rumors, also denied, in December. The factory like the Tesla one will be wholly owned and will supply at least half of its production for export.
8. Sales increase
Car sales in China in 2025 will be 30 million, and China will remain the world’s largest car exporter, with sales of 6.5 million. BYD will continue to be the largest car company in China and will sell 6 million. Xpeng will sell over 400,000 but Nio will once again fail to deliver and fall slightly short. Nio’s profitability will, however, be greatly improved thanks to the Nio ET9. Li Auto will see around 600,000 as the company’s all-electric models continue to fail to sell in the expected numbers. Xiaomi will more than double sales in 2025 and will likely exceed 350,000 for the whole year helped by the introduction of the YU7. It’s quite possible that Xiaomi will outsell Nio in 2025.
9. Solid-state battery model
Toward the end of 2025 a Chinese brand will announce that it will launch a new model in 2026 featuring an all-solid state battery. Most likely, the brand will be MG, GAC, or Chery, all of whom have solid-state batteries under development and have claimed that they will be mass-produced in 2026. An unveiling at the 2025 Guangzhou Auto Show will be highly likely or maybe even as early in concept form as the Shanghai Auto Show in April.
10. Autonomous driving arrives
A number of Chinese ADAS systems will claim full parking to parking smart driving with no interventions. These will use an end-to-end model AI system. Huawei or Xpeng are likely to be the first to announce the capability, but by the end of 2025, several companies will claim it.
