China’s EV Market Now Belongs to Chinese Brands, and Detroit Just Took a $25 Billion Hit to Prove It

I’ve been documenting the collapse of Western automakers’ China EV strategies for over a year, but the 2025 final numbers are worse than even I expected. Chinese brands now control nearly two-thirds of the world’s largest car market, and the foreign automakers who once dominated are either fleeing or writing off billions in failed EV investments.

The Wall Street Journal reports today that nearly 13 million full EVs and plug-in hybrids were sold in China last year, accounting for 54% of the entire market. Because the leading EV makers apart from Tesla are Chinese companies like BYD and Geely, the electrification trend helped Chinese brands capture nearly two-thirds of all passenger car sales.

Here’s the bottom line for EV buyers and investors:

• The Fact: Chinese brands took nearly two-thirds of China’s passenger car market in 2025, up from around 40% in 2021
• The Reality: Foreign automakers have no credible path back. GM just announced a $6 billion charge on its EV business. Ford took $19.5 billion in charges last month. Volkswagen closed its Nanjing plant.
• Why It Matters: China sold 7.9 million pure EVs last year, roughly six times estimated U.S. sales of 1.3 million. The global EV market is being shaped in China, and Western automakers are being shaped out of it.

The Numbers Tell the Story

China Passenger Car Association data released Friday shows EV and plug-in sales collectively rose 18% in China last year, marking a stark contrast with the U.S. and Europe where the transition away from gasoline-powered cars has slowed dramatically.

The market share chart tells the real story. Chinese brands climbed from roughly 40% market share in 2021 to over 60% by December 2025. German brands fell from around 20% to roughly 17%. Japanese brands dropped from nearly 20% to around 15%. American brands, which never held much ground in China, slipped further to around 10%.

Cui Dongshu, the secretary-general of China Passenger Car Association, summarized the competitive reality: “Overall, Chinese companies will continue to have a relatively clear advantage over many foreign brands.”

CLSA analyst Xiao Feng was more blunt: “For many other foreign carmakers, it’s basically impossible for them to catch up in the EV space.” He expects the Chinese share to rise to around three-fourths by 2030, potentially pushing most foreign automakers out entirely except for a handful like Tesla, Toyota, and Volkswagen.

Even Tesla Is Bleeding

Tesla remains the only foreign brand with a significant foothold in China’s EV market, but that foothold is shrinking. Tesla’s China sales dropped nearly 5% last year to about 626,000 cars, according to CPCA data. Globally, Tesla lost the global electric vehicle sales crown to BYD after reporting delivery declines for the second consecutive year.

The competitive gap isn’t about price alone. Chinese brands launch new models every 1.8 years on average, compared to 5.2 years for foreign automakers. They’re out-innovating, out-iterating, and out-executing while legacy automakers struggle to adapt decades-old development processes to a market that moves at smartphone speed.

Detroit’s $25 Billion Retreat

The financial carnage is staggering. General Motors announced Thursday it would book a $6 billion charge on its money-losing EV business. That follows Ford’s announcement in December of $19.5 billion in charges mostly tied to EVs, the largest EV impairment in U.S. auto industry history.

GM also expects to record charges of about $1.1 billion in the fourth quarter tied to its China business specifically. Volkswagen stopped producing cars at a plant in Nanjing. GM said it would close plants. These aren’t strategic pivots. These are retreats.

In the U.S., regulatory changes and weak demand are pushing American automakers to abandon EV plans entirely. Ford killed the F-150 Lightning. GM’s Ultium platform has become a $6 billion write-off. The subsidy-dependent strategies that Detroit bet billions on collapsed the moment the federal tax credit expired in September 2025.

China’s Market Is Also Under Pressure

The WSJ report includes a detail that should concern anyone watching this space: the Chinese market itself is showing cracks. According to a survey by the China Automobile Dealers Association, just 30% of car dealers were profitable in the first half of 2025, and almost three-quarters sold at least some cars below cost.

Beijing has been using purchase subsidies to nudge consumers to spend more. The trade-in subsidy went up to the equivalent of around $2,900 when buyers traded in an old car for a new electric or plug-in vehicle. Around 11.5 million vehicles were purchased through the trade-in program in 2025.

But some localities ran out of their budget for incentives by December. That caused passenger car sales to fall about 14% to 2.3 million vehicles in December compared with a year earlier. Some consumers held back hoping for better deals this year, though Beijing is trimming certain subsidies in 2026.

Overall, China’s passenger car market grew at its slowest pace in three years, expanding by around 4% to 23.7 million vehicles.

EVXL’s Take

I’ve tracked this story through Tesla’s China sales collapse to a three-year low, through Detroit’s admission that the Big Three hold less than 5% of global EV market share, and through the cascading billions in writedowns from Ford and GM. Today’s numbers from China confirm what the financial losses have been screaming: Western automakers built EVs that required government subsidies to sell. Chinese automakers built EVs that people actually wanted to buy.

The implications extend beyond China. BYD is now the world’s largest EV maker. Chinese brands are expanding aggressively into Europe, Southeast Asia, and Latin America. The technology advantage that allowed Japanese automakers to dominate the U.S. market in the 1980s is now playing out in reverse, with Chinese companies holding the cards.

Here’s my prediction: by mid-2026, we’ll see at least one more major Western automaker announce a complete exit from China EV production. GM’s $6 billion writedown isn’t the end of Detroit’s China reckoning. It’s the beginning.

For U.S. EV buyers, the irony is thick. The Chinese EVs that would compete most directly with overpriced American offerings are blocked by tariffs, while Detroit automakers retreat from the competition that would have forced them to build better, cheaper cars. Protectionism isn’t saving American EV manufacturing. It’s delaying the inevitable reckoning while Chinese competitors get stronger.

What do you think? Share your thoughts in the comments below.

Editorial Note: This article was researched and drafted with the assistance of AI to ensure technical accuracy and archive retrieval. All insights, industry analysis, and “Deltas” were provided exclusively by Haye Kesteloo and our authors, editors, and Youtube partners to ensure the “Human-First” perspective our readers expect.