China’s EV Sector Hit by ‘Three-Month Curse’ as New Models See Rapid Sales Decay
The relentless pace of product launches in China’s electric vehicle market is creating a volatile "boom-and-bust" cycle in 2025, where high-profile models are struggling to sustain sales momentum beyond their first quarter. Despite billions in research and development spending, automakers are finding that new vehicles—initially hailed as corporate "saviors"—are facing sharp demand cliffs after just 90 days, a phenomenon industry observers have dubbed the "Three-Month Curse."
This volatility is evident across major players, including sub-brands of NIO Inc. (Weilai) and joint ventures like Dongfeng Motor Group Co.’s partnership with Nissan. Models such as the Onvo L90 and Nissan N7, which were engineered to turn around their respective parent companies' fortunes, have seen delivery numbers halve shortly after hitting peak targets. The trend underscores a brutal reality in the world’s largest auto market: initial popularity is increasingly failing to translate into long-term market share.
The rapid deceleration is driven by a combination of hyper-competition, market saturation, and an aggressive iteration cycle that is eroding consumer trust. With a record 523 new models launched between January and November 2025, the market is fragmented, and aggressive price wars are yielding diminishing returns. Data shows that while product launches have hit historical highs, the broader retail market is contracting, forcing automakers to cannibalize their own sales or those of direct competitors to survive.
Investors and executives are now bracing for a shift in strategy as 2026 approaches. With government purchase subsidies drying up and regulatory bodies issuing new guidelines to curb below-cost selling, the industry’s reliance on short-term "hit" products and price cuts is becoming unsustainable. The focus is expected to pivot from sheer speed of iteration to brand stability and residual value protection as the market attempts to correct its chaotic trajectory.
Short-Lived Momentum for Key Models
The "Three-Month Curse" has affected some of the year's most anticipated vehicles. The Onvo L90, a model from NIO Inc.’s mass-market sub-brand, was instrumental in boosting the company’s performance in July. However, after stabilizing deliveries above 10,000 units from August through October, sales collapsed in November to just 5,970 vehicles—a drop of nearly 50%. Sales personnel attribute the decline to rapid market saturation, noting that the pool of immediate buyers was exhausted quickly. In a bid to recover, Onvo introduced additional subsidies in December, including a RMB 3,000 yuan (US$413) add-on to existing funds.
Similarly, the Nissan N7, a pivotal model for the Dongfeng-Nissan joint venture, has failed to hold its ground. Despite breaking the 10,000-unit monthly barrier in August—its fourth month on the market—sales slid to approximately 4,000 units by November. Internal cannibalization has exacerbated the issue, with potential customers diverted to the plug-in hybrid Nissan N6 or the tech-focused Teana HarmonyOS edition.
Other automakers are facing identical headwinds. The Lynk & Co 900 (from Geely Automobile Holdings Ltd.) and the Deepal S07 (from Changan Automobile Co., Ltd.) both saw sales plummet in November after promising starts. Established sellers are not immune; stalwarts like the Wuling Hongguang MINIEV and Geely Xingyue L also recorded sales declines exceeding 4,000 units this year.
Oversupply and The Perils of Rapid Iteration
The root of the volatility lies in a misalignment between supply and demand. According to industry data, 523 new models hit the Chinese market in the first 11 months of 2025, a record high. Conversely, retail sales in November fell 8.1% year-on-year to 2.22 million units. This saturation has led to intense homogenization; for example, between March and September alone, seven different "9-series" flagship SUVs were launched, all vying for the same shrinking demographic.
Furthermore, the velocity of product updates is backfiring. Brands like Zeekr Intelligent Technology Holding Ltd. have updated models like the Zeekr 001 three times within a single year (2023 model, 2024 model, and 2025 model). While this strategy aims to maintain technological leadership, it has damaged consumer confidence and crushed residual values for existing owners.
Comparison data highlights the disparity in strategy: Tesla Inc. has relied on the Model Y since 2019 with minimal changes until its 2025 refresh, maintaining strong sales. In the same period, BYD Co. Ltd. launched or updated over 139 models. Changan Automobile Chairman Zhu Huarong warned that this frenetic pace reduces consumer experience and prevents products from achieving necessary maturity.
Regulatory Intervention and 2026 Outlook
As the industry grapples with profitability, regulatory bodies are stepping in to stabilize the market. On December 12, the State Administration for Market Regulation released a draft "Compliance Guide for Price Behavior in the Automotive Industry," which explicitly prohibits selling cars below cost. This move is widely interpreted as a government effort to halt the destructive price wars that have eroded margins across the sector. Major players, including BYD, Dongfeng, and XPeng Inc., have signaled their compliance.
Looking ahead to 2026, the market faces the expiration of various subsidies and the "Two New" policy funds, which have already been largely depleted in many regions. The China Automobile Dealers Association noted a 23.7% drop in sales during the second half of November compared to the first half, attributing the slowdown to consumer hesitation and policy uncertainty.
The consensus emerging among automakers is that the strategy of flooding the market with new models—"having many children to win the fight"—is no longer viable. To survive the coming contraction, manufacturers must pivot toward building "hexagon warrior" products with sustained brand equity, similar to the Tesla Model Y, rather than relying on ephemeral "pop-up" hits that fade after a single quarter.