Hong Kong-listed Chinese electric vehicle (EV) manufacturers have experienced sustained declines in stock prices over several days, as year-end sales performance was weaker than in previous years.
So, why is this happening? Well, China’s electric vehicle (EV) subsidies are fading as the government shifts to a market-driven approach for a more mature industry. The national purchase subsidy ended in 2022, and a purchase tax exemption is scheduled to be phased out by 2027, though it is being scaled back from 2026. This is expected to slow domestic EV sales in the near term, leading some automakers to focus more on overseas markets like Malaysia.
In a significant policy shift, EVs were omitted from China’s five-year development plan for 2026-2030, the first exclusion in over a decade. This indicates that Beijing views the industry as mature and capable of operating without the same level of government intervention.
Meanwhile, EV companies like Nio Inc, Xpeng, Li Auto, and BYD shares fell in early trading yesterday, extending their multi-day losses.
Nio was down 1.95% to HKD 38.30 (US$ 4.90) per share, marking its fourth consecutive trading day of decline and reaching its lowest level since 19th August. The company has fallen approximately 33% over the past month.
Xpeng declined 1.99% to HKD 73.85 per share, also recording its fourth consecutive trading day of losses and reaching a new low since 4th August. Over the past month, its share price has dropped around 19%.
Li Auto fell 2.87% to HKD 67.80 per share, marking its fifth consecutive trading day of losses and reaching its lowest level since late November 2022. The company has declined approximately 17% over the past month and is down around 45% from its recent high in July.
BYD decreased 1.12% to HKD 97.05 per share, marking its second consecutive day of decline. Over the past month, the company has fallen roughly 2%.
Leapmotor declined 1.13%, having fallen around 11% over the past month.
These companies reported good deliveries last month but demonstrated weaker momentum compared with previous year-end periods. Question? How many Chinese EV manufacturer will stay profitable in the next 5 years?
The year-end delivery slowdown is partly attributable to the tapering of stimulus policies.
By mid-November, trade-in subsidies in most Chinese provinces had been adjusted, intensifying consumer wait-and-see sentiment and affecting the auto market, according to the China Passenger Car Association (CPCA) in a report dated 2nd December.
As China’s fourth batch of RMB 69 billion (USD9.8 billion) in national subsidies approaches depletion, an increasing number of local governments have suspended or adjusted vehicle trade-in incentives, Yicai reported yesterday.
To date, more than 20 municipal governments have suspended or adjusted applications for vehicle trade-in subsidies.
Furthermore, China’s current new energy vehicle purchase tax reduction policy is scheduled to begin scaling back in 2026, which may further affect first-quarter sales.
