China EV Stocks Plunge as Discounts and Subsidies Shrink

Shares of China’s leading electric-vehicle makers fell sharply this year. Nio traded around $5, XPeng at $13.21, Li Auto at $13.20 and Polestar at $20. BYD has lost roughly half its market value. Together these moves removed more than $100 billion from the group’s market capitalization.

Investors trimmed positions after rapid production increases and intense domestic competition pushed manufacturers into heavy price discounts. Nio traded nearly 30% below its May high. XPeng’s U.S.-listed shares are about 53% below their November 2025 peak, leaving a market value near $12.55 billion. Li Auto’s valuation has fallen to roughly $13.3 billion from about $34 billion at its peak last year. Polestar is around 52% below its 2025 high.

Quarterly delivery figures show rising output. BYD reported more than 1 million global deliveries in the first quarter, up 59% year-on-year. XPeng and Li Auto each recorded about 94,000 deliveries in the same period, Nio delivered 92,864 vehicles, and Polestar sold roughly 12,300. Those totals add to production from established global automakers and newer entrants increasing EV supply.

Policy changes in Beijing reduced purchase-tax support for new energy vehicles from a full exemption to a 50% exemption and cut the maximum tax deduction from 30,000 yuan to 15,000 yuan. Consumers accelerated purchases in the December quarter to take advantage of the earlier tax break. Several manufacturers offered “tax-difference guarantee” programs for customers who ordered before the change but received deliveries in 2026.

Price promotions and tax guarantees have supported unit sales but will put pressure on margins if maintained. Several Chinese EV companies are expanding overseas to offset domestic pressure. BYD, SAIC and XPeng have increased investments in Europe. Canada reduced tariffs on Chinese-made EVs from 100% to 6% for the first 50,000 vehicles, a change that could affect export volumes.

Market data show widespread share declines across the group as investors reassess growth and profitability prospects in a market with higher output, deeper discounts and reduced government subsidies.