BYD shares set for six-week slump after posting two-year low in sales amid

BEIJING — Shares of BYD were headed for a sixth straight week of declines after the Chinese electric car giant reported a nearly two-year low in local sales in January, signaling mounting challenges for the world’s largest auto market.

The slump comes amid rising concerns about lackluster domestic demand in China, and overproduction of cars spilling into other countries.

At least six major electric car brands from Xiaomi to Xpeng reported a sharp sales drop in January from December, according to CNBC’s analysis. Some companies only report deliveries rather than sales, and don’t break down overseas figures.

“We see increasing pressure on China’s auto market in 2026, driven by a combination of policy and competitive factors,” said Helen Liu, partner at Bain & Company. She said policy changes could prompt consumers to delay their car purchases, while automakers become more cautious about new vehicle launches.

China’s economic and business figures for the first two months of the year tend to be volatile as the Lunar New Year holiday, which follows an agrarian calendar, falls on different dates each year.

But this past January also saw a major reduction in government support for electric cars. Starting Jan. 1, China has reinstated a 5% purchase tax, after exempting new energy vehicles from the full 10% vehicle purchase tax for over a decade. New energy vehicles include battery and hybrid-powered cars.

“We know [EV sales will] slow, we just don’t know by how much,” said Tu Le, founder and managing director at consulting firm Sino Auto Insights. “We’ll know much better after the first quarter is over.”

The automaker also faces rising competition from local rivals, amid a price war that’s pushed automakers to offer more features at lower prices.

Aito, whose cars use smartphone and telecom giant Huawei’s operating system, reported more than 40,000 vehicle deliveries in January, up more than 80% from a year ago.

Leapmotor and Nio also saw year-on-year deliveries rise, to 32,059 and 27,182, respectively.

Smartphone company Xiaomi posted a year-on-year increase to over 39,000 deliveries of its electric cars in January, ahead of a planned upgrade to its SU7 sedan in April. But that was down from over 50,000 deliveries in December.

“BYD has had a stellar run at the top and it’s impressive how long they’ve been able to hold off their domestic competitors,” Le said, noting it’s not just one but several automakers vying for the same market.

“Companies like Geely with its Xingyuan [Galaxy EV] have really taken sales on the low end, where BYD’s bread is buttered,” he added.

Geely has climbed into second place in China’s electric car market behind BYD. In January, Geely sold more than 270,000 cars, including its electric car brands Galaxy and Zeekr,…