The Numbers
BYD reported January 2026 sales of 205,518 vehicles, marking a near two-year low and the fifth consecutive monthly decline. Battery-electric passenger cars dropped 33.6% year-on-year to 83,249 units, while plug-in hybrids fell 28.5% to 122,269 units.
Exports rose 51.5% to 100,482 units, cushioning the domestic hit. The company's revised 2026 export target of 1.3 million vehicles (down from 1.6 million) reflects the new reality: overseas expansion is now defensive, not optional.
The Policy Shift
China reinstated a 5% purchase tax on new energy vehicles starting January 1, ending more than a decade of full exemptions. Trade-in subsidies expired in several cities. The timing matters: after years of subsidies pushing EV penetration past 50% of new passenger car sales by mid-2024, Beijing is testing whether the market can stand without support.
First-quarter figures will tell the real story. January and February sales in China are volatile due to Lunar New Year timing, but the pattern is clear: five straight monthly declines for BYD, six major brands (Xiaomi, Xpeng, others) reporting sharp January drops.
What This Means
BYD overtook Tesla as the world's largest EV seller in 2025 with 2.26 million battery-electric vehicles. That success came from a domestic market built on subsidies and a brutal price war that forced features down-market. Now the subsidy tap is closing.
The company's battery production tells a different story: 20.187 GWh installed in January, up 30% year-on-year. Capacity isn't the issue. Demand is.
Competition intensified: Aito (using Huawei's OS) delivered 40,000 units in January, up 80% year-on-year. Nio and Leapmotor posted gains. Xiaomi delivered 39,000 units ahead of an SU7 sedan upgrade.
The Trade-off
BYD's Hungary plant began trial production, part of the export pivot. But here's the constraint: China's domestic overcapacity is now Europe's problem. The export surge that saved January's numbers is exactly what's driving trade tensions.
Worth noting: BYD's new Linghui ride-hailing brand and models like the Atto 1/2 suggest the company isn't betting on a quick policy reversal. They're diversifying channels and going after fleet sales.
The real question: Is this a policy-driven pause or the start of market saturation? First-quarter numbers will clarify whether January was seasonal noise or signal.