German automakers Mercedes-Benz, BMW, Audi, Volkswagen and Porsche are losing ground in China’s electric-vehicle market as sales decline amid tougher competition and the end of purchase-tax incentives. While Mercedes is increasing local production to cut costs and respond faster to demand, Chinese rivals such as Nio and Xiaomi are targeting rapid growth with popular, locally tailored models. Additionally, CFO Wilhelm has already acknowledged that Mercedes’ Chinese joint venture reflects lower profit contributions moving forward. However, Mercedes isn’t alone in the sales decline in China. Volkswagen, BMW, Audi, Porsche, and Mercedes are facing a steep decline in EV sales after Beijing ended the EV purchase tax rebate, causing combined electric sales across all five companies to plunge 55% in the first quarter of 2026.