China is intensifying its efforts in the electric car market. The country has unveiled a new strategy that pairs ambitious domestic sales targets with a sharper focus on exports. The new ambitions coincide with a significant increase in sales from Chinese brands in Europe, where their sales have more than doubled in the past year.
The Beijing government’s latest work plan for the automotive industry was published this month, outlining goals through 2026. It calls for new energy vehicle sales – a category encompassing battery-electric cars, plug-in hybrids, range extenders, and fuel cell models – to increase by 20% in 2025 to 15.5 million units.
Overall, car sales are expected to reach 32.3 million this year, indicating that nearly half of these vehicles will be electric or hybrid models. The contrast with powerhouse US couldn’t be starker.
Cash for clunkers
To support these targets, Beijing is implementing a series of measures. These aim to both bolster demand and tighten control over the industry. Subsidies and tax breaks are being rolled out for buyers, while a “cash for clunkers” scheme is designed to encourage people to replace older vehicles.
It’s an all-embracing program. Charging and battery-swapping infrastructure is to be extended into rural areas, and standards on safety, batteries, and self-driving systems will be strengthened (the latter were already accounted for earlier).
Beijing is also investing in research on advanced chips, solid-state batteries, and automotive operating systems to ensure technological independence.
But while the measures will fuel domestic growth, the bigger ambition lies abroad. Policymakers have told carmakers to design vehicles specifically for overseas markets. They are also urged to expand service networks and secure new shipping routes to Europe and beyond.
Chinese banks and insurers have been instructed to support the drive by offering export loans, currency hedging, and protection against geopolitical risks.
PHEVs on the rise
The strategy is building upon the growing sales success witnessed in Europe. Dataforce figures show that sales of Chinese-branded vehicles in Europe more than doubled in August compared to the same period a year earlier, giving them a 5.4% share of the EU market (in 2024, they accounted for less than 3%).
In the first half of 2025, deliveries increased by 74% to 430,650 units, despite the overall European market remaining relatively flat.
Plug-in hybrids, which Chinese brands are increasingly introducing in the EU, play a significant role in the uptick. These are not subject to the punitive tariffs while they fight EV adoption’s biggest hurdle: range anxiety.
Sales of PHEVs surged more than twelvefold last month, primarily attributed to the launch of new models, which created a new marketplace. But as the shift to PHEVs is still in its infancy, battery-electric models remain the bulk of sales. But they have slowed under the pressure of the tariffs.
The big winners
Among individual brands, MG Motor, owned by SAIC, posted a 46% rise in August sales, driven by strong demand for its HS compact SUV. Only yesterday, the brand unveiled a hybrid version of the HS, which is expected to boost the model’s sales potential.
BYD recorded a 230% increase to more than 10,000 vehicles, thanks in part to the popularity of the Seal U plug-in hybrid, which is now the second-best-selling PHEV in Europe this year.
Chery, which has introduced its Omoda and Jaecco brands alongside its leading marque, saw its monthly sales nearly fivefold, reaching just over 7,000 vehicles. More than other Chinese brands, Omoda and Jaecoo are firmly committed to PHEV technology, although they also offer battery-only cars.
Together, MG, BYD, and Chery now account for about four-fifths of all Chinese car sales in Europe, a rapid shift that underlines how far the country’s manufacturers have come.
With Beijing explicitly tying the health of its car industry to success abroad, Europe’s established carmakers may soon face even fiercer competition from their fast-rising Chinese rivals.
