China’s new energy vehicle (NEV) production jumped 25% to 16.52 million units in 2025, while output of internal combustion engine vehicles shrank 1% to 18.25 million. The as the automobile sector also posted record revenue of RMB 11.2 trillion ($1.6 trillion) in 2025, up 7.1% year-on-year, but profit margins were just 4.1%, well below the 5.9% average for China’s industrial sector. NEVs are now close to dominating the automobile sector, but gas guzzlers are still by a small margin outselling battery-power car. And the shrinking average profit margin for the sector is reflective of a fierce price war. Car manufacturing is one of the key “new productive forces” that China is shifting its economy towards as a replacement for property market and other sectors in trouble.