China's electric vehicle market slowed to 2024 comparable-period levels as weaker demand and subsidy reductions pressured automakers, Wood Mackenzie said in a Monday note.
Wood Mackenzie said the industry is entering a more competitive phase marked by slower domestic growth, shrinking margins, rising overseas expansion and widening technology differences.
"The industry is now being reshaped by charging performance, integration depth, and the ability to control cost across the full value chain," Wood Mackenzie analyst Alasia Zhang said.
The consultancy said fading trade-in subsidies, tighter financing conditions and selective price increases weakened Chinese consumer demand during 2026.
Several automakers also removed zero-interest financing programs, raising purchase costs as vehicle designs and in-car digital features became increasingly similar across brands, according to the note.
Wood Mackenzie said ultra-fast charging is becoming the sector's main competitive benchmark as automakers target charging from 10% to near-full capacity in less than 10 minutes.
"Ultra-fast charging is rapidly becoming the industry's defining performance benchmark rather than a standalone feature," Zhang said in the report.
BYD expanded an integrated fast-charging ecosystem covering batteries, vehicles and charging infrastructure, while Contemporary Amperex Technology or CATL pursued a broader strategy combining fast charging and battery swapping across multiple partners.
The report said rising battery raw material costs are squeezing profitability for mid-sized automakers that lack scale advantages or deeper vertical integration across supply chains.
Chinese automakers, including BYD, Geely, and Chery, are increasingly relying on overseas markets for growth as Europe and other export regions show stronger demand, according to Wood Mackenzie.
Battery makers are also expanding overseas as REPT advances plans for its first international production site, while Chinese automakers and battery suppliers accelerate global expansion to offset growing pressure in the domestic EV market, Wood Mackenzie said.
Wood Mackenzie said commercial rollout timelines for next-generation battery technologies continue to slip, as all-solid-state batteries remain unlikely to reach mass-market scale before 2030 due to high costs and limited vehicle integration.
Sunwoda estimates solid-state batteries still cost three to four times more than conventional systems, while CATL delayed large-scale deployment of its sodium-ion Naxtra platform to at least Q4 of 2026, according to the note.
Chinese automakers, including Geely, Changan, and Chery, are expanding hybrid vehicle platforms with larger batteries as stricter fuel-efficiency rules support adoption in the export market.
Wood Mackenzie said battery storage demand remains strong with full order books across major suppliers, while CATL is expanding further into system integration to accelerate project execution.