Highlights

• China's NEV production reached 1.243 million units in July 2025, representing 48.7% of total vehicle sales.
• NEV exports increased by a staggering 84.6% year-on-year, driving China's auto export growth.
• The NEV boom represents a strategic move to deepen China's control over critical rare earth supply chains for global EV production.

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China’s July 2025 auto production and sales data reveal a sustained surge in New Energy Vehicles (NEVs), reinforcing the country’s global lead in the EV transition and underscoring the strategic pull on rare earth supply chains. This, according to news from China Northern Rare Earth Group (CNRE), a state-owned rare earth conglomerate via Baogang Group.

Key Figures

• July 2025: NEV production hit 1.243 million units (+26.3% YoY), while sales reached 1.262 million units (+27.4% YoY). NEVs accounted for 48.7% of all new vehicle sales in China.
• January–July 2025: Total auto production and sales reached 18.235 million and 18.269 million units, respectively (+12–12.7% YoY). NEV production totaled 8.232 million units (+39.2%), with sales of 8.220 million units (+38.5%), giving NEVs a 45% market share year-to-date.
• Exports: From January to July, NEV exports hit 1.308 million units—a staggering +84.6% YoY increase—cementing NEVs as the main driver of China’s auto export growth.

Policy Tailwind

The China Association of Automobile Manufacturers noted that Beijing has issued a third batch of ultra-long-term special government bonds to support the “old-for-new” consumer goods trade-in program, with a fourth batch scheduled for October. This injection aims to sustain consumer confidence and keep auto demand steady in the second half of the year.

Evidence of China propping up its economic forces?

Implications for the West & the U.S.

China’s NEV boom is not just an auto industry story—it’s a rare earth supply chain event. Electric motors for NEVs rely heavily on neodymium-iron-boron (NdFeB) permanent magnets, which require key rare earths like neodymium, praseodymium, dysprosium, and terbium. With NEVs now nearing half of China’s domestic auto sales and export growth surging, China is tightening its grip on the downstream consumption of rare earths it already dominates in mining, separation, and magnet production.

For Western markets, this presents three strategic challenges:

1. Supply Pressure: Rising domestic and export NEV volumes could see more rare earth output absorbed internally, leaving less for export. Could this be part of Beijing’s plan?
2. Price Volatility: Strong demand combined with China’s market control could trigger price spikes, especially if export restrictions are used as a geopolitical lever. Ironically, higher prices may help support a Western boom.
3. Technology Dependence: China’s magnet-making capacity—critical for EV motors—is deeply integrated into its NEV supply chain, making decoupling more complex and costly.

REEx Take

China’s NEV surge is more than a sales milestone—it’s a structural shift that deepens Beijing’s leverage over the rare earths critical to the global EV race. For the U.S. and allies, the data point to an urgent need to accelerate domestic rare earth mining, refining, and magnet manufacturing to avoid strategic supply vulnerabilities.

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