The oversupply of China's new energy vehicle industry has led to a sharp decline in sales of foreign car companies, and the risks of many brands relying on the Chinese market have intensified
Quick Look
- China's strong subsidies for the new energy vehicle industry have led to overcapacity and market involution, causing multinational car companies that relied heavily on the Chinese market in the early years, such as General Motors's Buick, Cadillac, Ford Lincoln, and German BBA and Volkswagen brands, to see a sharp decline in sales.
- Among them, 90% of Buick's sales came from China, with only 436,000 units sold last year, compared with 2016.
- The annual peak fell by more than 60%; Cadillac's sales in China fell from a peak of 233,000 units in 2021 to about 100,000 units; Lincoln's sales in China dropped from nearly 80,000 units to 36,000 units; the three BBA's combined Chinese sales dropped by nearly 260,000 units; Volkswagen's sales in China fell by 8% to 2.6938 million units, surpassed by Geely for the first time.
AI-generated summary
Why It Matters
China has vigorously supported the new energy vehicle industry through subsidies and industrial policies over the years, leading to rapid expansion of production capacity. At the same time, the growth of the traditional fuel vehicle market has slowed down, and the penetration rate of new energy vehicles has increased, intensifying market competition. Foreign car companies had previously invested heavily in building factories and establishing joint ventures because they were optimistic about China's huge market size. However, they did not expect the rapid rise of domestic brands and the rapid shift in Chinese consumer preferences towards new energy vehicles.
[Reporter Gao Jiahe/Comprehensive Report] China has spent huge sums of money to support the new energy vehicle (electric vehicle) industry, and the auto market has suffered from overcapacity and bloody involution. Multinational car brands that bet on China in the early years once made a lot of money, but now their sales have been halved again and again at their peak. Among them, the Buick brand owned by General Motors in the United States relies on China for 90% of its sales, another brand Cadillac also accounts for nearly 40%, and Lincoln owned by Ford Motor Company accounts for nearly 30%. They are all regarded by the automobile industry as car brands that may disappear if they "wean off China".
Buick formed a joint venture in China called SAIC-GM with the state-owned enterprise SAIC Motor. When the Buick brand was at its peak in 2016, its annual sales in China were 1.23 million units. Last year, there were only 436,000 units left. Buick's presence in the United States is extremely low, and the risk of disappearing without the Chinese market is the highest.
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Cadillac, another brand under General Motors, sold more than 233,000 units in China in 2021, surpassing the United States and becoming the brand's largest single market in the world. However, by last year, sales in China had dropped to about 100,000 units, and the Chinese market share had dropped to about 35%.
The Lincoln brand under the Ford Group has established a joint venture with Changan Automobile, a state-owned enterprise, to establish Changan Ford. At its peak, Lincoln's annual sales in China were nearly 80,000 units, but last year it plummeted to 36,000 units. In 2024, sales in the United States once reached more than 100,000 units. The "biggest contributor" was the Lincoln Navigator, which was produced at Changan Ford's Hangzhou plant in China and then "sold back" to the United States. Nautilus), but as the U.S.-China trade war intensified, the overall tariff on Ford's Lincoln models imported from China soared to 52.5%. Ford had to announce in August this year that starting in 2030, it would withdraw the production lines of Lincoln Nautilus and other models from China and transfer them back to the United States.
Not only are U.S. automakers betting on China, but Germany's proud BBA (Benz, BMW and Audi) have also been overly reliant on the Chinese market, and their operations have entered a cold winter in recent years.
China accounts for about 25% to 38% of BBA sales, but sales in China will decline across the board in 2025. BMW fell by 12.5%, Mercedes fell by 19.5%, and Audi fell by 5%. The total sales of the three car companies in China decreased by nearly 260,000 units, directly returning to the level of 7 or 8 years ago.
Germany's Volkswagen (Volkswagen), which was the first to be bound to the Chinese market, formed joint ventures with two major state-owned enterprises, SAIC and FAW, and once occupied half of the Chinese auto market. However, in 2025, Volkswagen's sales in the Chinese market fell by 8% to 2.6938 million vehicles. The market shares of the two joint ventures were not only inferior to BYD, but were also surpassed by Geely for the first time.
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AI outlook — possibilities, not facts
Ford will withdraw Lincoln Nautilus and other model production lines from China and transfer them back to the United States starting in 2030
Very likely · Within years
Open Questions
- Will foreign car companies accelerate the launch of electric models in China to cope with competition?
- Will the Chinese government adjust its industrial policies to prevent overcapacity?
- Is the joint venture model still feasible in the current market environment?
- How will consumers' acceptance of foreign brand new energy vehicles evolve?
