Dozens of Chinese Electric Car Makers Threatened to Collapse in 2026 because of This

JAKARTA - Chinese-made electric vehicles are speeding up in the global market, supported by a surge in demand and government policies. In November alone, China's electric car exports jumped 87 percent compared to the same period last year.

However, behind this impressive pace, there is turmoil that is beginning to be seen in the foundation of the industry. The year 2026 is projected to be a crucial turning point for China's electric vehicle sector, as reported by Carscoops, Wednesday, December 31.

Major restructuring is expected to be inevitable, with dozens of manufacturers who have been scattered facing the risk of shrinking business scale to closing operations. New vehicle deliveries in China are expected to shrink by 5 percent next year, the largest shock since 2020.

This pressure is triggered by the government's reduced support and the classic problem of excess capacity that overshadows the country's automotive industry. A report by the South China Morning Post (SCMP) said that around 50 EV manufacturers in China who are still losing money could be forced to streamline their operations or even stop operations by 2026.

In January, the government is expected to decide whether the EV exchange subsidy worth 20,000 yuan will be extended or not. Meanwhile, the 10 percent purchase tax exemption will end this year.

The lower rate, 5 percent, will take effect from January and last until full tax returns in 2028. The price war that makes EVs more affordable is expanding the consumer base, but at the same time eroding margins.

The huge investment burden in research and development, coupled with the brand's ambition to build a fat model portfolio, makes only a handful of manufacturers able to make a profit.

"The euphoria of funding for EV manufacturers and major component suppliers in China is over. Now, it's a survival game, the profitable ones will survive, while the losers run out of ammunition," said one of the investors, Yin Ran.

Amid the storm, some big players remain standing strong. BYD, Seres, and Li Auto stand out as rare exceptions that have already posted profits and are expected to be more aggressive in expanding overseas to pursue new growth.

AlixPartners research even predicts that only about 10 percent of Chinese EV brands will be profitable in the next few years. On the other hand, there are also car manufacturers that get capital injections.

Leapmotor, which is backed by Stellantis, has just bagged a major investment. State-owned group FAW Group announced the acquisition of a 5 percent stake in Leapmotor worth 3.74 billion yuan, making it the first carmaker in China to receive direct investment from an automotive SOE group.

Leapmotor is targeting 1 million vehicles by 2026. If achieved, its position will be the third largest EV manufacturer in China, behind BYD and Geely. During the first 11 months of 2025, Leapmotor has shipped 536,132 units.

"Leapmotor targets 4 million units of annual shipments in 10 years. We will strengthen value through production refinement, while providing the best driving experience for customers," said Leapmotor founder and CEO Zhu Jiangming.