Keep an Eye on 12 Trends in China's Automotive Industry for 2026

Looking ahead to the automotive industry in 2026, forecasting challenges are significantly greater than in previous years. Observing the current automotive landscape requires integrating two perspectives: First, examining industry trends within the broader macroeconomic development framework rather than focusing solely on the automotive sector itself. Only by stepping outside the industry to view it can we gain clearer insights into its developmental patterns. Second, using the automotive industry's trajectory to reflect on macroeconomic development. As a pillar industry of the national economy, the challenges and trends within the automotive sector often mirror the overall state of the macroeconomy. Only by integrating these two perspectives can we accurately grasp the development characteristics of the automotive industry. Based on this, the following 12 key trends have been identified:

1.Continued Expansion of the Industry's National Status and Strategic Role. The automotive manufacturing sector accounts for approximately 10% of total manufacturing revenue, while automotive consumption represents about 10% of total retail sales. It serves as a core pillar for stabilizing economic growth.

2.Accelerated exploration of a new “three highs” development model. The traditional scale- and cost-driven model is unsustainable, necessitating a shift toward high technology, high profitability, and high value.

3.Domestic market enters a high-volume, low-growth cycle. Domestic vehicle sales are projected to exceed 28 million units by 2026 and stabilize around 30 million units by 2030.

4.Rapid increase in the proportion of new energy vehicles in the vehicle stock. By 2026, new energy vehicle sales (including exports) are projected to exceed 20 million units, with market share rising to 15%. This share is expected to reach 30% by 2030, indicating substantial growth potential.

5.Next-generation battery technologies for electrification enter commercialization phase. Automakers will likely deploy quasi-solid-state batteries by 2026, while all-solid-state batteries will enter small-scale demonstration applications around 2027. The technological focus is shifting toward sulfide-based routes. Initially constrained by cost, these will primarily serve premium models. By 2030, solid-state batteries with 500Wh/kg energy density will see initial large-scale adoption.

6.Advanced driver assistance systems achieve widespread adoption. 2026 marks a pivotal year for ADAS proliferation, with product costs transitioning from the “ten-thousand-yuan era” to the “thousand-yuan era.” Level 2 ADAS will become standard equipment in mainstream models, achieving over 70% penetration. Even economy electric vehicles priced around ¥100,000 will widely incorporate these systems, with China's industrial supply chain providing core support.

7.Continuous breakthroughs in intelligent core technologies. Concentrated investments by automakers and chip companies are expected to yield landmark advances in key technologies like onboard computing power and large-scale chips. Automakers are accelerating their transformation into “AI-driven technology companies,” with intelligent technology investment becoming an industry consensus.

8.Overseas automotive exports will surge in scale, regional expansion, and model upgrades. China's vehicle exports are projected to exceed 8 million units by 2026, targeting 10 million by 2030, with new energy vehicles driving most growth. “Global South” markets emerge as new frontiers, while Europe remains a high-value strategic market. Export models shift from single-channel trade to diversified approaches.

9.Multinational automakers accelerate transformation to adapt to China's market. With domestic brands now holding a 65% market share, multinationals urgently need to adjust: on one hand, increasing R&D investment in China to build independent R&D systems and achieve “localized R&D and decision-making”; on the other hand, leveraging China-based R&D outcomes for global markets.

10.Accelerated convergence of the industry with robotics and low-altitude economy. With approximately 70% overlap in supply chains, AI technology foundations are breaking industrial boundaries, fostering bidirectional integration.

11.Emerging services become a key growth track. Narrowing manufacturing margins are driving the industry toward service-oriented transformation. Digital services, software upgrades, and other emerging offerings are forming diverse business models alongside traditional services, creating a “second growth curve.” By 2030, the aftermarket for intelligent new energy vehicles is projected to reach 5 trillion yuan, matching the scale of the manufacturing sector.

12.Policy focus shifts toward regulation and consumption promotion. Policies will adopt a three-pronged approach of “raising standards, enforcing strict oversight, and strengthening regulations.” Concurrently, consumption will be continuously stimulated, leveraging new energy vehicles as a driver for expanding domestic demand. This includes tapping into the potential of lower-tier markets, improving usage environments to establish long-term consumption mechanisms, and promoting stable market development.