China’s electric vehicle market has entered a pivotal moment. Industry leader BYD saw deliveries decline for the first time this year, raising questions about whether its dominance is sustainable amid intensifying competition. While BYD still commands more than half of the domestic EV market, September’s results underscored a broader transition, as nimble upstarts increasingly capture consumer demand.

BYD Faces Rare Slowdown

BYD delivered 393,060 units in September, a 6% decline from a year earlier. The decline is notable not only because it coincides with the peak sales season but also because it follows the company’s decision to lower its 2025 sales target by as much as 16% to 4.6 million vehicles. Analysts point to heightened price competition, slowing demand in the mass market, and the erosion of early-mover advantages.

Despite the pullback, BYD remains the largest EV maker by far, capturing 54% of all domestic sales last month. Its ability to maintain this lead reflects the depth of its product line and cost efficiency. Yet, investors are questioning whether this dominant position can withstand the rapid ascent of challengers armed with fresh designs, aggressive pricing, and government-supported incentives.

Rising Momentum Among Startups

In sharp contrast, China’s EV newcomers delivered record-breaking results in September. Leapmotor reported 66,657 units sold, nearly doubling last year’s tally and extending a run of all-time highs. Backed by Stellantis, the company’s C10 and C16 models continued to lead their price segments, underscoring strong consumer uptake in the mid-market range.

The Huawei-backed Harmony Intelligent Mobility Alliance, which includes Aito, Chery, and Maextro, also broke records with 52,916 deliveries, finally moving past the 40,000-unit ceiling it had struggled to surpass earlier this year. Xiaomi, a new entrant with ambitions beyond smartphones, reached over 40,000 deliveries in September, marking a sharp acceleration since the launch of its YU7 model in July, a direct rival to Tesla’s Model Y.

Established Challengers Gain Ground

Xpeng, which has hovered in the 30,000 range for nearly a year, surged to 41,581 deliveries in September, up 95% year-over-year. Nio also achieved back-to-back record highs, delivering 34,749 vehicles, driven by strong demand for its family-oriented Onvo brand. Li Auto, after months of weaker sales, rebounded to 33,951 deliveries, regaining momentum in its competitive segment.

Although Geely’s Zeekr fell slightly short of its record with 18,257 deliveries, the brand remains a formidable player in the premium EV market. Collectively, the performance of these firms demonstrates not only resilience but also a structural shift in consumer demand toward diverse offerings and brand alternatives.

What to Watch Ahead

The September figures highlight a turning point for China’s EV sector. For BYD, the challenge is no longer just expanding production capacity but defending its position against a growing array of competitors that are rapidly scaling. Price competition, evolving consumer tastes, and government policies will all play pivotal roles in shaping the next phase of growth.

For investors and policymakers, the key question is whether the surge in startup sales signals a more fragmented market ahead, or if industry consolidation will ultimately favor a smaller number of dominant players. As global automakers monitor these shifts, China’s EV landscape in the final quarter of 2025 may prove decisive in setting the tone for worldwide competition in the years ahead.