China’s EV demand may drop 30% in early 2026 due to expired incentives and reduced buying surges.

China’s lithium battery demand is projected to drop sharply in early 2026, with domestic EV sales expected to fall at least 30% from late 2025 levels due to the end of tax incentives and subsidy-driven year-end buying surges. Commercial EV demand may also decline significantly. While exports to the EU rose 4% in 2025, shipments to the U.S. fell 9.5%, as rising U.S. energy storage demand from AI growth isn’t boosting Chinese exports, partly due to U.S. restrictions on foreign entities. Battery makers like CATL and EVE Energy may face challenges, prompting industry warnings to scale back production.