BYD Led China’s EV Boom. Now It Has Some Bad News

We also discuss Tesla and Waymo's U.S. Senate hearing on self-driving cars and Canada's revised EV policy.

BYD CM

Photo by: InsideEVs

Suvrat Kothari

By: Suvrat Kothari

Feb 6, at 9:00am ET

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China's enviable electric vehicles have made American automakers extremely nervous in recent times. But if you're assuming that Chinese automakers are simply cruising at home, with generous subsidies and cutting-edge battery tech, you'd be mistaken. EV sales in China are starting to flatline and even BYD, the country’s dominant player in the space, is feeling the heat.

Welcome back to Critical Materials, your daily round-up of news shaping the world of electric cars and technology. Also on the menu today: U.S. senators had tough questions for Waymo and Tesla during a Commerce Committee hearing this week. And Canada has rolled back its EV ambitions, while also accelerating its pro-EV policies.

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25%: BYD Sales Fall In China Amid Rising Competition

BYD Seal U DM-i

Photo by: BYD

After years of rapid growth, EV sales in China grew a modest 1% in January, mainly due to the expiration of subsidies in December and the introduction of a new purchase tax in the new year.

BYD, the country’s dominant automaker that spearheaded China’s EV boom, was hit the hardest. Its sales dropped 30% year over year to just over 210,000 units due to changing EV policies and rising competition.

It's a sign that the EV transition is not just messy in America, but also in the world’s largest electric car market, where plug-in vehicles accounted for more than 50% of the new car market last year.

Here's more from CNBC:

“We know [EV sales will] slow, we just don’t know by how much,” said Tu Le, founder and managing director at consulting firm Sino Auto Insights. “We’ll know much better after the first quarter is over.”

“BYD has had a stellar run at the top and it’s impressive how long they’ve been able to hold off their domestic competitors,” Le said, noting it’s not just one but several automakers vying for the same market.

“Companies like Geely with its Xingyuan [Galaxy EV] have really taken sales on the low end, where BYD’s bread is buttered,” he added.

This turbulence shows the influence of policy. After more than a decade of exemptions and subsidies, China slapped a 5% purchase tax on EVs starting Jan. 1, and the market reacted immediately.

The pattern mirrors what played out in the U.S. in the third quarter of last year, when buyers rushed to lock in federal tax credits before they expired at the end of September. China saw the same pull-forward effect, with demand spiking in December before the new tax regime kicked in.

Geely Geome Xingyuan

Geely Galaxy Xingyuan

Photo by: Telescope

Moreover, BYD is up against an increasingly formidable field of rivals that includes Xiaomi, Xpeng, Geely, Nio and others. The Geely Galaxy Xingyuan electric supermini was China’s best-selling "new energy vehicle" last year, racking up 465,000 sales and knocking the Tesla Model Y off the top spot it held the year before.

Xiaomi’s meteoric rise continued too, with its SU7 sedan finishing as China’s seventh best-selling model, posting more than 250,000 sales. BYD still accounts for five of the top ten best-selling models, but rivals are catching up fast.

50%: Robotaxi Concerns Hit Capitol Hill

Tesla Robotaxi

Photo by: Tesla

U.S. Senators grilled top executives from Tesla and Waymo during a Commerce Committee hearing on Wednesday, pressing them on several thorny issues facing autonomous vehicles, from safety and misleading marketing practices to teleoperation conducted overseas and competition from China.

There was plenty of back-and-forth, but little in the way of consensus. In the end, lawmakers did not seem to coalesce around a national framework to accelerate robotaxi deployment, despite the pleas from Tesla and Waymo. Tesla’s vice president of vehicle engineering, Lars Moravy, tried to rally the committee to support the country's robotaxi ambitions.

Here's a recap of what he said, via The Verge:

“Federal regulations for vehicles have not kept up with the pace of the rapid evolution of technology. Many standards were implemented decades ago and do not adequately address modern advancements, such as electric drive trains, automated driving systems, and over-the-air software updates. We need American leadership for AV rules and regulations.”

Waymo was asked about last month's incident when one of its Jaguar I-Pace robotaxis struck a child in Santa Monica, causing minor injuries. Mauricio Peña, Waymo's chief safety officer, said the company will collect more data regarding lighting patterns and conditions and feed them into its AI system to prevent such accidents from recurring.

Some senators also seemed upset over Waymo using the Chinese-made Zeekr vans for testing and Tesla's marketing of its Full-Self Driving (FSD) software, which still requires full driver supervision on its consumer vehicles.

While companies work to accelerate their investments in autonomy, it's unclear if whether federal regulation will ever catch up. Until then, expect them to continue navigating a patchwork of local and state laws.

75%: Canada Scraps EV Mandate, Accelerates Incentive Program

Tesla Canada

Photo by: InsideEVs

There's a plot twist in Canada's EV ambitions. Prime Minister Mark Carney scrapped the country's 2035 ban on internal combustion engines, which was passed under former PM Justin Trudeau.

At the same time, the country is taking steps to strengthen EV adoption with stricter greenhouse gas emission standards and a new $2.3 billion Canadian ($1.7 billion U.S.) incentive program for EVs and plug-in hybrids.

Here's more from CBC:

"Canada will set a new, more ambitious sovereign path to reduce automobile emissions," Carney said at a news conference at an auto parts manufacturer in the Greater Toronto Area.

Carney expects his new emissions system will lead to 75 per cent of new cars sold in Canada being electric by 2035 — an ambitious goal, but still less than the previous mandate that Carney is ditching.

Carney announced the Liberal government is also launching a new $2.3-billion program to offer consumers and businesses purchase or lease incentives of up to $5,000 for EVs and up to $2,500 for plug-in hybrids.

With less pressure to go fully electric over the next decade, automakers will almost certainly welcome the move, especially as their margins are being squeezed from all directions, with the Trump administration's tariffs, the capital-intensive pivot to EVs and the threat of lower-cost Chinese rivals.

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100%: Is Scrapping The Gas Car Ban Justified?

Is easing the gas-car ban the right call? Does it risk giving automakers an excuse to slow-walk the transition, or does it buy the industry some breathing room to fix things like charging infrastructure and core EV tech?

Contact the author: suvrat.kothari@insideevs.com