China's auto industry is still expanding at remarkable scale, but its 2025 interim results show a sector dividing sharply between leaders with technology, exports and cash flow, and laggards struggling to survive the electric transition.
A booming market with a widening divide
Production and sales both exceeded 15mn vehicles for the first time in the first half, according to the China Association of Automobile Manufacturers. New-energy vehicle production reached 6.968mn units and sales reached 6.937mn. Exports rose 10.4 per cent to 3.083mn vehicles, with new-energy exports jumping 75.2 per cent to 1.06mn.
Behind that headline growth, profitability is concentrating. Among 18 listed passenger-vehicle companies, BYD led with first-half net profit of about $2.2bn, while seven companies together recorded losses of more than $2.8bn. Chery and BYD doubled down on overseas growth, as Dongfeng and BAIC faced profit collapses tied to slower transformation.
The market-share shift is equally stark. Joint-venture brands that held roughly 60 per cent of China's passenger-car market in 2020 have fallen to about 30 per cent in 2025. The gap between leading domestic groups and some weaker new-entrant brands has expanded to more than tenfold in certain measures.
Leaders are profitable, but margins are under pressure
BYD, Geely and Great Wall remain among China's most profitable private-sector automakers. BYD posted revenue of about $51.6bn in the first half, up 23.3 per cent, and net profit of about $2.2bn. Its auto gross margin reached 20.35 per cent.
Geely reported revenue of about $20.9bn, up 27 per cent, with net profit of roughly $1.3bn, down 14 per cent. Its core gross margin was 16.4 per cent. Great Wall recorded revenue of about $12.8bn, a small year-on-year gain, and attributable net profit of roughly $880mn, down 10.48 per cent. Its gross margin slipped to 18.38 per cent.
Even the leaders are not immune to the price war. The three companies' combined profit, about $4.3bn, was close to the net profit of battery giant CATL alone, which earned about $4.2bn. That comparison has reinforced a common industry complaint: selling cars can be less profitable than supplying the batteries inside them.
New-energy start-ups are splitting into winners and strugglers
Leapmotor was one of the first-half standouts. Deliveries rose 155.7 per cent to 221,700 vehicles, helping the company reach positive half-year net profit for the first time at about $4mn. Adjusted net profit reached about $46mn, and gross margin climbed to 14.1 per cent, up 13 percentage points from a year earlier.
Xpeng also accelerated sharply, with first-half deliveries of 197,200 vehicles, up 279 per cent. That translated into rapid revenue and volume growth, strengthening its position among China's better-performing electric-vehicle challengers.
Nio and Li Auto faced a more complicated picture. Nio delivered 72,056 vehicles in the second quarter, up 25.6 per cent from a year earlier and 71.2 per cent from the previous quarter, but still reported a net loss of about $694mn. Heavy spending on its battery-swap network and rising competition in the premium market keep profitability out of reach.
Li Auto remained profitable for an eleventh consecutive quarter, but second-quarter revenue fell 4.5 per cent to about $4.2bn. Its family-car positioning, once a clear differentiator, is being challenged as more Chinese EV brands move into the same use case.
Traditional groups face a harsher transition
The pressure on older automakers is becoming more visible. Dongfeng Motor Group's attributable net profit fell 92 per cent to about $8mn in the first half. BAIC BluePark achieved 154 per cent revenue growth but still lost about $321mn. JAC Motors' revenue fell 9.1 per cent and it swung to a net loss of about $107mn, with operating cash flow deteriorating to roughly negative $437mn.
These results show how quickly scale can lose value if a company is late in electrification, software development or export expansion. A large legacy base no longer guarantees earnings power in China's car market.
Exports are becoming a second growth engine
With domestic competition intensifying, overseas markets have become central to the strategies of China's leading automakers. CAAM data showed vehicle exports reached 3.68mn units in the first seven months of 2025, up 12.8 per cent. Export value exceeded $60bn, up 8.5 per cent.
Chery remained the leading Chinese-brand exporter for a 22nd consecutive year, shipping 550,000 vehicles in the first half. Its growth rate of 3.3 per cent was modest, but its global footprint is extensive, with six research and development bases, several software centres, sales networks in more than 110 markets and cumulative overseas sales above 4mn vehicles by early 2025.
BYD ranked second with 443,000 exports, up 117.8 per cent. Its passenger-car and pickup sales outside China exceeded 550,000 units in the first seven months, more than last year's full-year overseas total. The company has indicated an overseas sales target of about 800,000 vehicles for 2025.
SAIC Passenger Vehicle ranked third with 242,600 exports, down 4.5 per cent. Its MG brand remains strong in Europe and is on course to become the first Chinese automotive brand with more than 3mn cumulative overseas sales. Geely and Great Wall followed with 184,000 and 167,600 exports, respectively.
New EV brands are also beginning to travel. Leapmotor exported 20,400 vehicles in the first half as European orders increased, while Xpeng entered the top 20 exporters with 18,700 units and gained traction in south-east Asia.
Research spending is defining the next round
The split in earnings is closely tied to research capacity. Among 18 listed automakers that disclosed data, first-half research and development spending rose 32.94 per cent to about $12.8bn, with average spending of about $710mn per company.
BYD invested about $4.3bn in research and development during the first half, equal to roughly 8.32 per cent of revenue. That spending supports projects such as its DM-i 5.0 hybrid system and fourth-generation Blade Battery.
Geely followed a more ecosystem-based approach, spending about $1.0bn, up 21.32 per cent, with a focus on upgrades to its SEA architecture and intelligent cockpit systems. Great Wall spent about $589mn, up 1.21 per cent. In the first quarter, its research expenses of about $265mn were below selling expenses of roughly $319mn, suggesting a heavier near-term tilt toward sales support.
The shake-out is becoming structural
China's auto market is no longer dividing only by fuel type. It is splitting by technology depth, global reach, cost discipline, brand power and balance-sheet strength. Companies that combine core technology, export scale and stable profits are gaining influence. Those dependent on traditional petrol models, weaker research budgets or limited overseas expansion face a rising risk of elimination.
The second half of 2025 is likely to sharpen that divide. For global investors and overseas competitors, the message from China's interim results is clear: the country's auto industry is still growing, but the spoils are being claimed by fewer, stronger players.
