Highlights

• China's new-energy vehicle (NEV) startups saw deliveries drop sharply month-over-month in January 2026.
• Key companies affected included:
  • Huawei-linked HarmonyOS (-35.3% MoM)
  • Xiaomi Auto
  • NIO (-43.5% MoM)
  • XPeng (-46.7% MoM)
• The synchronized slump triggered immediate price wars in February.
• Brands including Xiaomi, NIO, Avita, and XPeng launched aggressive incentives such as:
  • 0.49% APR financing for up to 84 months
  • Reduced down payments
  • Tax subsidies
• These measures signal intensifying competitive pressure and demand fatigue.
• The downstream demand collapse poses risks such as:
  • Overproduction risk that could impact upstream batteries and permanent magnets
  • Pressure on global pricing
  • Complications for Western efforts to build competitive domestic EV supply chains
• China seeks to monetize its rare-earth-anchored advantage.

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China’s new-energy vehicle (NEV) startups opened 2026 with a stumble. January deliveries fell across the board month-on-month, triggering a swift wave of price cuts and ultra-low-interest financing in early February from brands including Xiaomi Auto, NIO, and peers. While most automakers still posted year-on-year growth, the sequential collapse from December was steep—a sign of demand fatigue just as China seeks to monetize its rare-earth-anchored EV supply chain at scale.

The Numbers Don’t Lie: A Synchronized Pullback

The January data show a uniform slowdown. Huawei-linked HarmonyOS Intelligent Mobility retained the top spot with 57,900 deliveries, up 65.6% YoY but down 35.3% MoM from December’s 89,600. Leapmotor delivered 32,100 vehicles (+27% YoY; -46.9% MoM) while simultaneously reaffirming a 1-million-vehicle target for 2026—nearly double last year’s output. Xiaomi Auto reported 39,000 deliveries, well above last year but down sharply from 50,000+ in December.

The “Weixiaoli” group also retreated in unison. Li Auto delivered 27,700 vehicles (-37.5% MoM), NIO 27,200 (-43.5% MoM), and XPeng Motors 20,000 (-46.7% MoM). Traditional automaker EV brands fared no better: Dongfeng’s Voyah posted 10,500 deliveries (-34.2% MoM), while SAIC’s Zhiji fell to 5,017, roughly half its late-2025 monthly run rate.

Policy Headwinds and Seasonal Reality Check

State-affiliated media attribute the downturn to a convergence of factors: the expiration of NEV tax exemptions, the uneven rollout of vehicle replacement subsidies, and Spring Festival timing, which pulled demand into December and left January seasonally weak. Data from the China Passenger Car Association (CPCA) reinforce the slowdown: national retail passenger-car sales from January 1–18 fell 28% YoY and 37% MoM.

Price Wars, Reloaded

The market response was immediate. February opened with aggressive incentives: Avita rolled out ¥8,000 tax subsidies and 7-year low-interest loans; NIO launched 0.49% APR financing for up to 84 months; Xiaomi followed with a 7-year low-interest plan featuring reduced down payments. XPeng and others had already moved earlier with similar offers—suggesting competitive pressure is intensifying, not easing.

Why the West Should Pay Attention

Downstream EV demand is where China converts its rare-earth, magnet, and battery supply-chain dominance into cash flow. January’s synchronized slump—visible in the sales chart showing universal MoM declines—signals a growing risk of overproduction, a trend Rare Earth Exchanges™ has repeatedly documented. If discounting becomes structural, margin pressure will flow upstream into batteries, permanent magnets, and critical minerals, reshaping global pricing dynamics and complicating U.S. and European efforts to build competitive, higher-cost domestic supply chains.

Disclaimer: This item is translated and summarized from reporting by Chinese state-affiliated media. The information has not been independently verified and should be confirmed through independent sources before being used for investment, procurement, or policy decisions.