Ten Key Events Witnessing China's Auto Industry Transformation in 2025
In a year defined by profound transformation, the Chinese automotive sector has navigated 2025 with a clear focus on "stabilizing volume and improving quality." The following report, originally published by NBD Automotive, was released on December 24, 2025. It details the accelerating restructuring of the global industry landscape and the distinct characteristics of the Chinese market, where New Energy Vehicles (NEVs) and Intelligent Connected Vehicles (ICVs) have become the dual engines of growth.
The report highlights that 2025 marked a shift from aggressive "price wars" to "technology wars" and ecosystem competition. It underscores significant strides in localizing key technologies—such as chips, operating systems, and battery materials—and the industry's progression toward a more mature stage of high-quality development. As China’s auto industry reshapes domestic dynamics and influences the global value chain, this recap of the top ten news stories of 2025 provides global investors and observers with crucial insights into the market's trajectory, regulatory shifts, and technological breakthroughs.
2025 was a year in which China's auto industry moved forward firmly amidst profound changes. The global automotive industry landscape accelerated its reshaping, and the domestic market presented a new trend of "stabilizing volume and improving quality" amidst fierce competition. Annual production and sales remained robust during structural adjustments, and the dual-drive characteristics of New Energy Vehicles and Intelligent Connected Vehicles became increasingly distinct.
This year, the auto industry not only achieved collective breakthroughs in key technologies but also moved towards a more mature and rational stage of high-quality development under the dual influence of policy guidance and market self-discipline.
This year, the "price war" gradually gave way to a "technology war" and an "ecosystem war." The core competitiveness of auto enterprises shifted from production capacity and marketing to full-stack self-research capabilities, vertical supply chain integration, and user ecosystem operations. Localized breakthroughs in key fields such as chips, operating systems, and battery materials have laid a more solid foundation for industrial security and development.
amidst the dual melody of technological autonomy and global cooperation, China's auto industry responded to challenges with resilience and defined the future with innovation. It has not only reshaped the local market landscape but also profoundly affected the global auto industry's value chain.
Looking back at 2025, on the main channels of electrification, intelligence, and globalization, the direction of China's auto industry has become clearer, and its pace more steady. The "visible hand" of policy and the "invisible hand" of the market exerted force synergistically, and the long-termism of technological innovation is replacing the restlessness of short-term traffic.
On the occasion of bidding farewell to the old and welcoming the new, Daily Economic News has systematically reviewed the key nodes and profound changes in the development of China's auto industry in 2025, officially releasing the "Top Ten Automotive Industry News of 2025." This serves to record the progress of the times, condense the industrial context, and look forward to the path of future evolution.
Keyword 1: 60% Event: New Energy Passenger Vehicle penetration rate exceeds 60% for the first time.
News: Data from the China Passenger Car Association (CPCA) shows that from December 1 to 7, the retail penetration rate of new energy passenger vehicles nationwide reached 62.2%, and the wholesale penetration rate reached as high as 64.3%, marking the official entry of China's new energy passenger vehicle penetration rate into the 60% era.
This breakthrough is an inevitable result of continuous market growth. In November 2025, the national new energy passenger vehicle penetration rate had already reached 59.3%, laying the foundation for breaking 60% in December. The rapid growth of the penetration rate is inseparable from the strong leadership of domestic brands. In November, the penetration rate of new energy passenger vehicles among domestic brands was as high as 79.6%, meaning that for every 10 domestic brand cars sold, 8 were new energy models.
However, the policy on exemption from vehicle purchase tax for new energy vehicles, which has been implemented for ten years, will officially conclude on December 31, 2025. From 2026, it will be adjusted to a policy of halving the tax collection. This policy adjustment may trigger fluctuations in market demand at the turn of the year, but in the long run, it will promote the smooth transition of the new energy vehicle market from "policy-driven" to "product-driven."
Keyword 2: Smart Driving Promotion Event: MIIT issues document to regulate intelligent driving publicity, strictly prohibiting exaggeration and misleading claims.
News: In April 2025, in response to the chaos in intelligent driving publicity in the auto industry, the Ministry of Industry and Information Technology (MIIT) urgently issued a document explicitly requiring automakers not to use exaggerated terms such as "autonomous driving." The MIIT emphasized that automobile manufacturers must fully carry out combined driving assistance testing and verification, clarify system function boundaries and safety response measures, must not engage in exaggerated and false publicity, strictly fulfill notification obligations, effectively shoulder the main responsibility for production consistency and quality safety, and effectively improve the safety level of intelligent connected vehicle products.
Previously, to seize market share, some automakers abused vague expressions such as "autonomous driving," "high-level smart driving," and "zero takeover," and even packaged L2-level assisted driving as "quasi-L3-level," downplaying system limitations. This led consumers to misjudge function boundaries and over-rely on systems, causing multiple road safety accidents.
After the policy was introduced, automakers responded quickly and adjusted their publicity rhetoric. At important occasions such as this year's Shanghai Auto Show, exaggerated expressions were hard to find. The industry's "frenzied marketing competition" cooled down, ensuring consumers' right to know through standardized publicity and promoting the healthy development of the intelligent connected vehicle industry.
Keyword 3: Battery Safety Event: Battery safety mandatory national standard upgraded, requiring "no fire, no explosion."
News: On March 28, 2025, the mandatory national standard Safety Requirements for Power Batteries for Electric Vehicles (GB38031-2025), organized and formulated by the MIIT, was approved and released by the State Administration for Market Regulation and the Standardization Administration of China. It will be implemented starting July 1, 2026.
The new standard mainly revises the technical requirements for thermal diffusion testing. The requirement has been revised from "providing a thermal event alarm signal 5 minutes before fire or explosion" to "no fire, no explosion (alarm still required), and smoke does not cause harm to occupants." It further clarifies the temperature requirements for the battery under test, power on/off status, observation time, and vehicle testing conditions.
At the same time, the new standard adds a bottom impact test to examine the protection capability of the battery bottom after being impacted, requiring no leakage, shell rupture, fire, or explosion, and meeting insulation resistance requirements. It also adds a safety test after fast charging cycles, examining the safety of power batteries after long-term fast charging. It requires an external short circuit test after 300 fast charging cycles, demanding no fire and no explosion.
This battery safety threshold, which can be called the strictest in the world, proves that while China is vigorously promoting the development of new energy vehicles, it attaches unprecedented importance to driving safety. This measure will force the entire industry to upgrade battery technology and eliminate backward production capacity.
Keyword 4: Anti-"Involution" Event: CAAM unites with 17 automakers to release an anti-"involution" initiative.
News: At the end of May 2025, the China Association of Automobile Manufacturers (CAAM) released the Initiative on Maintaining Fair Competition Order and Promoting Healthy Industry Development to the entire industry. It explicitly stated support for enterprises to participate in market competition through normal means and resolutely opposed bottomless "price wars."
This move officially pressed the pause button on the vicious "price war" in the domestic auto market that lasted for nearly three years. The focus of competition among automakers began to shift from "exchanging price for volume" to technology, quality, and supply chain health. In this context, automakers took the lead in "anti-involution" by starting with solving supplier payment period issues, promoting the reconstruction of upstream and downstream relationships.
Keyword 5: L3 Autonomous Driving Event: MIIT approves mass production access for L3 autonomous driving vehicles.
News: On December 15, 2025, the MIIT officially announced the admission permission for China's first batch of L3-level conditionally autonomous driving models, marking a new stage for China's autonomous driving industry from technical verification to mass production application. Models from Changan Deepal and BAIC Arcfox were officially approved.
According to national standards, approved L3 models can achieve legal hands-off driving on designated urban roads, highways, and urban expressways, autonomously completing dynamic driving tasks such as lane changing, overtaking, and avoiding pedestrians and vehicles. The maximum speed for pilot models in Beijing is 80 km/h, and for pilot models in congestion scenarios in Chongqing, it is 50 km/h. Drivers need to remain alert and respond in a timely manner when receiving a system takeover request.
Keyword 6: Trade-in Event: 2025 auto trade-in policy lands, National IV models included in subsidies.
News: In early 2025, eight departments including the Ministry of Commerce and the MIIT issued a notice making arrangements for auto trade-in work in 2025. It explicitly included fuel passenger cars meeting National IV emission standards within the scope of old cars eligible for scrappage and renewal subsidies. This move directly leveraged the huge existing market stock, becoming an important power source for driving steady growth in the auto market and increasing the penetration rate of new energy vehicles.
Data from the Ministry of Commerce shows that in the first 11 months of this year, consumer goods trade-ins drove related commodity sales exceeding RMB 2.5 trillion (US$344.8 billion), among which the transaction volume of automobile "trade-ins" exceeded 11.2 million vehicles.
Keyword 7: Zero-Mile Used Cars Event: Four departments jointly issue document to strictly control export of zero-mile used cars, setting a 180-day registration red line.
News: In November 2025, the Ministry of Commerce, the MIIT, the Ministry of Public Security, and the General Administration of Customs jointly issued the Notice on Further Strengthening the Management of Used Car Exports (hereinafter referred to as the "Notice"). The Notice clarifies that starting from January 1, 2026, if a vehicle applied for export has been registered for less than 180 days (including 180 days), the export enterprise must supplementarily submit a Confirmation of After-sales Maintenance Service issued by the vehicle manufacturer. The document must include the export destination country, vehicle information, overseas after-sales service network information, etc., and be stamped with the enterprise's official seal. Vehicles unable to provide this document will not be issued an export license.
Before the policy was introduced, there was chaos in the industry regarding the export of "zero-mile used cars." Although such vehicles had completed registration, their actual mileage was extremely low, and their condition was no different from new cars. This policy precisely struck at the behavior of arbitrage by exporting new cars in the name of used cars, while not completely prohibiting their circulation, balancing industry development with market standardization needs.
Keyword 8: Pure Electric Sales Champion Changes Hands Event: BYD pure electric vehicle sales surpass Tesla for the first time, reaching number one globally.
News: In May 2025, BYD surpassed Tesla with a 15.7% share of the global pure electric vehicle market, taking the throne as the global pure electric sales champion. This marks a key leap for Chinese brands from following to leading in the global new energy vehicle race.
Behind this milestone is the comprehensive leadership of domestic brands in technology, production capacity, and market layout. Data from the CPCA showing that from January to November this year, the retail market share of domestic brands was 65%, an increase of 5 percentage points over the same period last year. They have become the main engine of auto market growth, driving a synchronous growth of 9.7% in domestic auto market sales in the first 11 months.
Keyword 9: HK IPOs Event: Smart driving enterprises flock to list in Hong Kong, industrial cluster effect becomes prominent.
News: In 2025, multiple enterprises in the intelligent driving field intensively landed on the Hong Kong capital market, setting off a wave of listings in Hong Kong. Enterprises such as Pony.ai, WeRide , Simu , Pateo, and Hesai have completed listing and trading on the Hong Kong Stock Exchange. These cover multiple sub-sectors such as autonomous driving solution R&D, intelligent vehicle system manufacturing, and LiDAR production, covering core links in the upstream and downstream of the intelligent driving industry chain.
Among the enterprises listing centrally this time, there are both technology companies focusing on high-level autonomous driving algorithm R&D and supply chain enterprises focusing on core hardware production for intelligent driving, forming a complete listing echelon from technology R&D to product manufacturing. With multiple enterprises successfully landing on the Hong Kong stock market, the intelligent driving industrial cluster effect has become further prominent, attracting a large amount of global capital into this track and helping related enterprises carry out technical R&D and business layout in the global market.
Keyword 10: Solid-State Battery Event: Critical breakthrough in solid-state battery technology, multiple automakers advance mass production preparations.
News: In 2025, China's solid-state battery technology ushered in a critical breakthrough. Research teams from the Chinese Academy of Sciences, Tsinghua University, and others successfully solved core problems that had long restricted the implementation of the technology, such as poor contact at the solid electrolyte-electrode interface and excessively high interface impedance, through material formula optimization and process innovation.
The industrial side synchronized to accelerate mass production preparations. GAC built the first domestic large-capacity all-solid-state battery production line. The production line has large-scale production capabilities and plans to start small-batch vehicle installation testing in 2026. Leading power battery enterprises such as Contemporary Amperex (CATL) and BYD are also stepping up solid-state battery R&D and production line layout, continuously increasing R&D investment to improve the technical system. At the policy level, the MIIT provided special subsidies for equipment purchases for solid-state battery pilot lines, reducing enterprise costs for R&D and mass production preparation, and promoting solid-state battery technology from the laboratory to the industrial application stage.
Commentary:
Over the past year, under the dual drive of policy and market, China's auto industry has completed a key transformation, presenting distinct characteristics of structural reshaping, deepening competition, and conversion of momentum.
The penetration rate of new energy passenger vehicles breaking through 60% for the first time is of milestone significance. It marks that new energy vehicles have moved from being primarily policy-guided to a stage fully driven by market recognition and consumption, becoming the absolute mainstream in the domestic auto market. Behind this change is the joint result of the country's long-term, consistent policy support and continuous technological innovation in the industry chain. The penetration rate of NEVs will continue to rise steadily in the future, product appeal will continue to strengthen, traditional Internal Combustion Engine (ICE) vehicles will gradually become niche, and the shift in industrial dominance is irreversible.
Currently, the main contradiction in the auto industry is not simple terminal price competition, but the imbalance in profit distribution along the industry chain. The dominant position of the upstream battery and key raw material links, especially the abnormal fluctuations in resource prices such as lithium, has severely squeezed the profit margins of the midstream vehicle manufacturing link. Automakers face the dual squeeze of upstream cost pressures and terminal market demand, and the overall profit margin of the industry is at a low level. Therefore, healthy "anti-involution" should be dedicated to building a more reasonable benefit-sharing mechanism for the industry chain to specific the sustainable development of the industrial ecosystem.
In addition, the "trade-in" policy effectively stimulated demand for replacement upgrades and was one of the most important growth engines for the auto consumption market this year, significantly promoting sales growth and shaping the annual trend of "high opening and stable follow-through" in the auto market. This not only laid a solid foundation for the auto market this year but also created favorable conditions for subsequent development. The continuation and optimization of policies will continue to provide support and expectations for stable growth in the auto market next year.
BYD's pure electric model sales reaching number one globally is not only a breakthrough for a single enterprise but also a concentrated reflection of the leap in the overall competitiveness of China's new energy vehicle industry chain. It marks that Chinese brands have occupied an important position in the first echelon of the global electric vehicle market, changing the long-standing global competitive landscape. It is a landmark achievement in the process of China's auto industry growing from big to strong.
In the past year, the main line of China's auto industry was clear, and the transformation was profound. The dominant position of new energy vehicles was established, the industry chain sought a new balance in the game, consumption policies effectively held up the market, and Chinese brands achieved breakthroughs in global influence. These changes jointly outline a new industrial picture that is more vibrant but also faces new challenges, pointing out the direction and path for future high-quality development.
Specific Commentary on L3:
On December 15, the Ministry of Industry and Information Technology officially announced the admission permission for China's first batch of L3-level conditionally autonomous driving models. One pure electric sedan each from Changan Deepal and BAIC Arcfox was selected to start road pilots in designated areas of Beijing and Chongqing, respectively.
The initial approval of two models for testing under specified roads, designated operating companies, and intelligent connected vehicle demonstration zone management indicates that the MIIT and the Ministry of Public Security have begun to actively promote autonomous driving product certification work.
Although the Traffic Management Bureau of the Ministry of Public Security has issued a reminder that "intelligent driving has not reached autonomous driving capabilities," phenomena of blurring the safety boundary between intelligent driving and autonomous driving previously existed in the publicity of automakers and some media. It was highly necessary for the MIIT to further issue documents to regulate intelligent driving publicity and strictly prohibit exaggerated publicity.
In 2025, intelligent driving ushered in mass production. Leading enterprises were able to advance upwards into L3 autonomous driving and L4 unmanned driving. The democratization of intelligent driving greatly increased the mass production and popularity of NOA (Navigate on Autopilot). Through entrepreneurship over the past 5 to 10 years, many intelligent driving startups have met IPO conditions since 2025, resulting in a large number of listed companies.