China's electric vehicle (EV) market is facing a slowdown, with BYD, a leading player, experiencing a near two-year low in sales. This trend is concerning for the world's largest auto market, which is already grappling with rising concerns about domestic demand and overproduction. The slump is part of a broader industry-wide slowdown, with new energy vehicle sales increasing by only 2.6% year-on-year in December, the third consecutive month of slowing growth. This is a significant shift for an industry that has been a bright spot in China's economy, which is struggling with a prolonged decline in real estate. The slowdown could have a broader economic impact, with the auto sector contributing to about 30 million jobs in China, or more than one-tenth of urban employment. However, the economic share of the auto sector is still relatively small compared to real estate, with autos accounting for only 3.7% of fixed asset investment last year, while real estate made up 23%. China's top leaders are expected to release policy targets for the year at an annual parliamentary meeting in March, and many in the industry expect Beijing to reinstate some or all of the subsidies if the auto sector worsens further.
