2026 Already Has Its Fangs Out - What NIO Faces Next Year"

The Chinese EV market is entering 2026 facing unprecedented challenges as subsidies end, competition intensifies, and market growth stalls. This episode analyzes what NIO and other Chinese automakers face in 2026 based on recent statements from XPeng CEO He Xiaopeng and NIO CEO Li Bin, both warning that next year's competition will be more brutal and bloody than 2025.On November 20, 2025, after launching the XPeng X9 extended-range version, He Xiaopeng stated: "I think every car company is on tenterhooks. Everyone wants to go far and achieve steady progress. A year ago we could hardly have imagined the changes we have now, and we can hardly imagine them a year from now. The only thing I can be sure of is that the competition will be even more brutal and bloody." The following day, NIO CEO Li Bin echoed this sentiment: "I agree with what Mr. Xiaopeng said. The intensity of competition in the Chinese auto market is actually increasing every year. Which year is not bloody? Which year is not cruel? Perhaps it will not be until 2035 that the pattern will truly stabilize."Three core realities will define 2026 for Chinese EV companies. First, the market has shifted from blitzkrieg to war of attrition. Li Bin explained that defeating competitors with a single move is extremely difficult, stating that being one year ahead in core technologies is already remarkable. He emphasized that success requires being one to two percentage points more efficient than competitors in every aspect, with no weaknesses allowed. This is a long-term marathon requiring comprehensive capabilities rather than breakthrough innovations.Second, the Chinese auto market is shrinking rather than growing. From November 1 to November 23, 2025, national passenger vehicle retail sales showed both year-over-year and month-over-month declines. The era of rapid growth has ended, replaced by competition for existing market share. With trade-in subsidies completely phased out and purchase tax subsidies cut in half starting January 1, 2026, market conditions will worsen in Q1 2026. Li Bin acknowledged that early reduction of trade-in subsidies eliminated the year-end boost effect in Q4 2025, with all NIO models except ES8, Firefly, and ET9 affected to varying degrees, explaining November's month-over-month delivery decline to 36,275 units.Third, product launch frequency has become a key battleground with divergent strategies. XPeng plans to launch seven extended-range models in 2026. HarmonyOS will release more than 20 new cars next year. Leapmotor, having achieved its 500,000 unit target 45 days early, is targeting 1 million deliveries in 2026 with multiple new models across A and D series. However, Li Bin announced NIO will only launch three new models in 2026, stating: "I don't think we have to keep releasing new models. Look at this year, we only have two models and they are selling quite well. We don't necessarily have to release them so frequently, and the team may not be able to manage it."XPeng's market capitalization has fallen nearly 30 percent since mid-November despite announcing ambitious physical AI initiatives at their early November Tech Day, including humanoid robot IRON, flying cars, second-generation VLA large model, and three Robotaxi models planned for 2026 launch. The company repositioned as a mobility explorer in physical AI and globally embodied intelligence company. In contrast, Tesla's Optimus robot demonstrations contributed to Tesla's market cap surging over 40 percent in the second half of 2025 despite showing similar or less advanced capabilities. This valuation gap highlights how US markets reward technology narratives while Chinese markets remain skeptical, valuing Chinese EV companies primarily as automakers rather than technology platforms despite comparable or superior technical capabilities.

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