Illustration: Xia Qing/GT

The New York Times questioned the future of China's electric vehicle (EV) sector in a headline "Stock Slide and Slow Sales: What's Happening in China's E.V. Market?" The article quoted John Paul MacDuffie, a professor at the Wharton School of the University of Pennsylvania, as saying that Chinese companies are "maxing out the number of people for whom it makes sense" to buy one. 

This raises the question of whether demand in the world's largest EV market is approaching saturation. A closer look at production volumes, sales performance and penetration rates, however, shows that the market is far from reaching a structural ceiling.

On the contrary, China's new-energy vehicle (NEV) market continues to expand at an impressive scale. Domestic sales reached 13.88 million units in 2025, up 19.8 percent year-on-year, according to the China Association of Automobile Manufacturers. The double-digit growth highlights the sector's scale and scope, as well as its resilience, reinforcing the view that demand remains far from saturation.

China's NEV market experienced some volatility in January, partly driven by advance purchases at the end of last year. Available figures suggest that these fluctuations were likely short-lived. According to the China Automobile Dealers Association, retail sales of new-energy passenger vehicles from February 1 to 8 reached 119,000 units, up 42 percent year-on-year and 41 percent month-on-month. 

Wholesale deliveries over the same period totaled 125,000 units, a 39 percent increase year-on-year and 3 percent higher than the previous month. The figures indicate that the market is already rebounding from January's slowdown, underscoring the underlying resilience of demand.

As of 2025, the penetration rate of new-energy passenger vehicles in China reached 53.9 percent, reflecting a market that has already attained a considerable level of maturity. Even so, the sector still offers meaningful opportunities for additional demand, driven by several factors, including but not limited to the following.

China's demand for NEVs remains far from reaching a ceiling. On the one hand, given the country's vast geography, further expansion of charging infrastructure is likely to spur additional demand, particularly in lower-tier cities and vast rural areas. As of the end of December 2025, there are 20.09 million charging facilities in China, according to the People's Daily. An action plan jointly issued by the National Development and Reform Commission and other authorities aims to raise the number of charging facilities to 28 million by the end of 2027. The expansion of charging infrastructure is paving for broader NEV adoption nationwide, unlocking new opportunities in underserved regions.

On the other hand, additional demand is arising from vehicle replacement cycles, technological upgrades and expansion of diversified usage scenarios. Rapid advances in NEV technology give consumers clear incentives to upgrade to newer models, particularly those seeking the latest features or improved performance. As NEVs become more intelligent and versatile, these trends are creating incremental opportunities that extend beyond the existing customer base.

China's NEV penetration rate is projected to climb further, pointing to continued market expansion. 

According to the Economic Daily, the China Society of Automotive Engineers, with input from more than 2,000 industry experts, has released version 3.0 of its roadmap for energy-saving and NEV technologies.

The roadmap sets a target for new-energy passenger vehicles to surpass 85 percent penetration by 2040, underscoring the sector's significant long-term growth potential.

Nevertheless, the growth of China's NEV industry faces considerable challenges. Short-term demand fluctuations, driven by factors such as policy adjustments, sales cycles, or transient market factors, are inevitable in a fast-evolving market. Such volatility should not be mistaken for evidence of a structural ceiling.

Over the medium to long term, China's NEV demand is set to trend upward, with ample room for growth. Backed by strengthening consumer confidence, ongoing technological progress, and continued infrastructure expansion, the sector is well-positioned to sustain its positive trajectory despite short-term fluctuations. This positive outlook offers opportunities for manufacturers, both domestic and international.

China's NEV market is highly open and competitive, providing scope for innovation and the introduction of new models and technologies. Multinational automakers with a competitive edge can find ample opportunities alongside Chinese companies, participating in a market that continues to expand in scale, diversity and technological sophistication.

The author is a reporter with the Global Times. bizopinion@globaltimes.com.cn