BYD sales plunge in first two months of 2026 as EV giant loses more ground to competitors

In a notable shift in the electric vehicle (EV) landscape, BYD has reported a significant decline in its sales during the first two months of 2026, losing market share to rising domestic competitors. The leading EV manufacturer saw its combined sales for January and February plummet by approximately 36% compared to the same period last year. This decline has been adjusted to reflect the usual seasonal slowdown tied to the two-week Chinese New Year holiday that occurred in mid-February. While BYD struggled, several other Chinese EV makers experienced sales growth. Leapmotor reported a strong performance with sales reaching 60,126 units, marking a 19% increase year-on-year. Xiaomi also made headlines by selling over 59,000 units, showcasing a remarkable 48% rise in sales during the same timeframe. Notably, Nio and Geely's Zeekr saw even more impressive growth, with respective increases of 77% and approximately 84% year-on-year, as calculated by CNBC. In contrast, Xpeng faced the largest sales drop among its peers, with a reported 42% decrease, leading to total deliveries of 35,267. Li Auto also saw a slight decline, with sales down nearly 4%, totaling 54,089. Analysts suggest that BYD's diminishing lead indicates a more equitable playing field in China's EV sector, driven by competitors offering increasingly attractive options. Leon Cheng, head of the mobility practice at YCP, stated, "BYD's lead is real but narrowing... A full reversal is unlikely near-term, but domestic share compression is the direction of travel." Once commanding a market share of 26-34% in the new energy vehicle sector, BYD now faces aggressive competition from automakers like Geely and Leapmotor, who have strategically targeted BYD's core mid-market segment. The competitive landscape has intensified as rival manufacturers focus on delivering high-value offerings while keeping prices appealing, a strategy referred to as involution. Xiaomi's new YU7 SUV has emerged as the top-selling passenger vehicle in January, outselling Tesla's Model Y. Additionally, the reintroduction of a 5% purchase tax on new energy vehicles at the end of 2025 may have created a demand vacuum, as consumers rushed to purchase vehicles ahead of the tax implementation. According to Abby Tu, a principal research analyst at S&P Global Mobility, differentiating products in this evolving market is becoming increasingly challenging. Many competitors are carving out niches in the luxury segment to establish their presence in China’s vast EV market. In response to fierce competition domestically, BYD has been shifting its focus to international markets. February marked a pivotal moment for the company, as its exports exceeded domestic sales for the first time, with over 1 million units sold abroad in 2025. Cheng noted, "BYD's hedge is exports — overseas sales crossed 1 million units in 2025 for the first time, providing a buffer against domestic rivals." Looking ahead, BYD plans to launch new products later this year, including a new battery technology. Cheng pointed out that last year's rollout of the 'God's Eye' Advanced Driver Assistance System stimulated demand without igniting a price war, and a similar approach is anticipated with the upcoming Blade Battery 2.0 and second-generation fast charging technologies. Despite the impressive sales figures from several automakers, the overall EV market in China is still facing a slowdown in demand. The return of the 5% purchase tax signals a move toward normalization in the EV market, as regulators aim to foster self-reliance among local manufacturers. However, analysts warn that reducing financial incentives may dampen demand for new EV purchases as costs are likely to shift to consumers. Creative financing schemes, such as Tesla's five-year 0% interest loans and Xiaomi's low-interest financing options, are being employed by automakers to help stimulate domestic demand.