BYD, the world's largest electric vehicle manufacturer, experienced a significant decline in sales during the first two months of 2026, with combined January and February sales volume dipping by roughly 36% compared to the previous year, even after adjusting for the seasonal slowdown caused by the Chinese New Year holiday [1]. This contraction in BYD's sales has resulted in a narrowing of its lead in China's EV market, signaling a shift toward a more competitive landscape as rival automakers gain traction [1].
While BYD's sales fell, several domestic competitors reported substantial year-on-year increases. Leapmotor recorded 60,126 sales in January and February, marking a 19% jump, and Xiaomi sold more than 59,000 units, representing a 48% increase [1]. Nio and Geely's Zeekr saw even more pronounced growth, with combined sales surging by 77% and about 84% year on year, respectively [1]. In contrast, Xpeng experienced the largest year-on-year decline, with deliveries dropping by roughly 42% to 35,267 units, and Li Auto's deliveries fell nearly 4% to 54,089 sales [1].
Industry analysts note that BYD's market share, which ranged from 26-34% in China's new energy vehicle market during 2024-2025, is being compressed as competitors like Geely and Leapmotor target BYD's core mid-market segment [1]. Leon Cheng, head of the mobility practice at YCP, commented, "BYD's lead is real but narrowing... A full reversal is unlikely near-term, but domestic share compression is the direction of travel" [1]. Rival automakers are employing strategies such as 'involution,' packing more value into their vehicles while maintaining competitive prices to erode BYD's dominance [1].
Xiaomi's new YU7 SUV emerged as China's best-selling passenger vehicle in January, selling more than twice the number of Tesla's Model Y cars, which had been the best-selling model the previous month [1]. The reinstatement of the 5% purchase tax on new energy vehicles, announced at the end of 2025, is also noted as a factor impacting market dynamics, though further details are not provided in the article [1].
CONCLUSION
BYD's sales decline and narrowing market lead highlight intensifying competition in China's EV sector, with rivals like Leapmotor, Xiaomi, Nio, and Geely achieving robust growth. The market is becoming more balanced as competitors target BYD's core segments and offer greater value. This shift is likely to drive further innovation and price competition among Chinese EV manufacturers.