In 2026, outside a new energy vehicle delivery center in Pudong, Shanghai, a dozen car owners unfurled a white banner. They were not protesting quality issues but holding signs like "Restore Our After-Sales" and "Who Manages the Disconnected In-Car Network?" These owners had purchased HiPhi vehicles from Human Horizons, which had just officially declared bankruptcy liquidation. The after-sales hotline went unanswered, the APP's remote control functions were shut down one by one, and even insurance companies began raising premiums for HiPhi models. Due to a halt in parts supply, repair costs after accidents soared.

This was not an isolated case. In Zhengzhou, a Weltmeister owner spent two months finding a repair shop willing to take the job, waiting 45 days for a door lock replacement sourced from secondhand parts on Xianyu. In Chongqing, a third-party repair shop specializing in "orphaned vehicles" thrived, with the owner stating, "The phone never stops ringing. We only fix abandoned brands with no support."

According to the China Automobile Dealers Association, as of May this year, 23 domestic new energy vehicle companies have declared bankruptcy or ceased operations, leaving approximately 850,000 such "orphaned vehicles." These vehicles lack official after-sales support, OTA updates, and parts supply, becoming abandoned on the roads.

Zooming out, 129 new energy brands still struggle in the domestic market, averaging less than 80,000 annual sales, while the industry consensus places the breakeven point at 400,000 annual sales. In other words, most brands have never truly escaped the loss-making zone since their inception.

Why have new energy vehicles, despite heavy promotion, entered a reshuffle phase so early? What does it take to survive in this brutal survival game?

Reshuffle: From Wild Growth to Mass Elimination

China's new energy vehicle industry accomplished in less than a decade what traditional automakers achieved in half a century. This rapid development, while advancing technology, also concealed numerous issues: PPT-based car manufacturing, capital games, Blindly crossing boundaries (blind cross-industry moves), and overcapacity.

In 2022, Neta Auto topped the sales charts among new forces, basking in glory. Just four years later, in March 2026, its parent company Hozon Auto declared bankruptcy liquidation after accumulating losses exceeding RMB 18.3 billion. Weltmeister, once hailed as one of the "Four Little Dragons" alongside NIO, XPeng, and Li Auto, failed in three IPO attempts before applying for bankruptcy restructuring in 2023, ultimately collapsing into asset liquidation with debts surpassing RMB 26 billion. Evergrande Auto invested over RMB 100 billion but only mass-produced one model. Following its parent company's debt crisis, its core entity faced bankruptcy liquidation proceedings in March 2026.

These were not isolated cases. Six companies, including Byton, Singulato, and Borqun, failed to achieve mass production of compliant new energy passenger vehicles before collapsing, with zero sales. Brands like Aiways, Seres, and Qiantu experienced brief success but ultimately collapsed at the mass production and delivery stage due to broken capital chains and dismal sales.

A closer look at these failures reveals several recurring fatal flaws.

First is pathological capital dependence. Most relied on financing to sustain operations, lacking self-sufficiency. Once capital markets tightened or parent companies faltered, they immediately faced funding droughts. Cross-industry players like Evergrande and Baoneng, aiming to replicate success through "buying sprees," left behind massive unfinished production capacity due to underestimating the automotive industry's complexity and long cycles.

Externally, hollow product competitiveness emerged as another major issue. Many brands poured resources into marketing and conceptual packaging while relying on external procurement for core technologies, lacking independent R&D capabilities. When price wars erupted and industry technology rapidly iterated, they lacked both cost advantages and technological barriers, leaving them passive.

Notably, most failed brands never crossed the scale threshold. Automotive is a classic economies-of-scale industry, with annual sales of 400,000 units widely seen as the breakeven lifeline. Brands like HiPhi, selling fewer than 20,000 units annually, incurred massive per-unit losses, making sustainability impossible.

Concurrent issues included strategic vacillation and positioning ambiguity. Leading, transitioning from low-speed electric vehicles, failed to adapt to passenger car competition rules. Qiantu, positioning itself as premium, faltered due to excessively high prices and a niche market.

In a market of Stock game ( inventory competition), brands without clear positioning and differentiated competitiveness face early elimination.

Survivors: Inflection Point Arrives, Polarization Intensifies

On the flip side of the bankruptcy wave, leading players collectively approached profitability. 2025 financial reports indicate China's new energy vehicle industry is shifting from burning cash for market share to pursuing profitability.

BYD led with RMB 803.965 billion in revenue and RMB 33.761 billion in net profit. Li Auto remained profitable for three consecutive years, with RMB 1.1 billion in net profit in 2025, becoming the "steadiest top student" among new forces. Leapmotor topped new force sales with 596,600 annual deliveries and RMB 538 million in net profit, becoming the second new force to achieve full-year profitability.

More notably, NIO and XPeng, though still loss-making in 2025 (NIO: RMB 14.943 billion net loss; XPeng: RMB 1.139 billion net loss), achieved single-quarter profitability in Q4. This marked a decade-long journey where the "NIO, XPeng, Li Auto, Leapmotor" quartet all crossed or neared the breakeven point, with scaling effects taking hold.

What drove profitability? Core was the release of economies of scale.

Leapmotor achieved single-quarter profitability with annual sales below 300,000 units, breaking the traditional 500,000-unit benchmark and proving that innovation and cost control could lower the profitability threshold. Li Auto exceeded RMB 10 billion in net profit with 376,000 annual sales. By 2025, Leapmotor delivered nearly 600,000 units, XPeng over 420,000, and Li Auto over 400,000.

Scale diluted fixed costs, significantly boosting gross margins. Meanwhile, cost control and independent R&D accelerated profitability. Leapmotor adhered to full-domain independent R&D, self-manufacturing core components to control costs. XPeng saved material costs through 800V high-voltage platforms and integrated die-casting technology. Industry-wide battery costs dropped about 30% over two years, creating profitability space.

Of course, profitability sustainability remains cautious. Li Auto's 2025 net profit fell 85.8% YoY, with operating profit actually turning negative, relying on massive cash reserves' financial income to sustain paper profitability. NIO and XPeng achieved quarterly profits but remained loss-making annually. Industry profit margins continued declining, hitting 3.2% in Q1 2026, a historical low.

Profitability dawn (dawn) has emerged, but the long-term profitability inflection point has yet to truly arrive, with industry polarization only intensifying.

Finale: Who Stays at the Table?

Global consultancy AlixPartners predicts that by 2030, only seven Chinese new energy-focused automakers may truly achieve breakeven. NIO founder William Li also judges that the industry landscape will largely stabilize in the next three to five years. So, what kind of enterprises will survive?

On one hand, scaled players crossing the "400,000-unit lifeline" will be the first to pass muster. Monthly sales of 33,000 units form a hard threshold; below it, fixed costs cannot be effectively diluted, and losses are inevitable. Based on H1 2026 data, no more than five brands may consistently exceed 33,000 monthly sales, with BYD, Leapmotor, and Harmony Intelligent Mobility (HIM) stable (firmly established), Li Auto and XPeng teetering on the edge, and most brands selling fewer than 10,000 units monthly. Future survivors must first secure this "scale ticket" to discuss longer-term prospects.

On the other hand, all-round players with systemic operational capabilities will prevail over longer cycles. Past competitions focused on range, screens, and configurations; now, with tri-electric systems and basic intelligence becoming standard, competition shifts to full-chain efficiency in R&D, supply chains, manufacturing, channels, and services.

BYD leveraged vertical integration to build an insurmountable cost moat. NIO persisted with multi-brand strategies and independent R&D in intelligent driving chips and battery swap networks, creating long-term, unbreakable barriers despite short-term losses. Li Auto excelled with precise product definitions and strong cash flow management, becoming the most stable new force. Huawei's HIM and Xiaomi also wield strong ecological capabilities and brand momentum.

Further, intelligence may be the most noteworthy trait in the final round. In July 2026, the MIIT issued mandatory national standards for "Safety Requirements for Autonomous Driving Systems in Intelligent Connected Vehicles," making intelligent driving capabilities a market entry requirement rather than a bonus. The AI-defined automotive era has arrived, with software and service revenue becoming new profit sources for automakers. Brands lacking independent R&D in AI, chips, and operating systems will be rapidly marginalized in the next competition round. Those first to deliver seamless, reliable intelligent driving experiences will occupy irreplaceable positions in consumers' minds.

Additionally, two special player types warrant attention. One is "wealthy second-generation" brands backed by powerful parents. Zeekr (Geely), Voyah (Dongfeng), and Avatr, New Energy (new energy) brands incubated by traditional automakers, remain small but enjoy longer loss tolerance and stronger systemic support from their parents' funds, technology, and supply chains. The other is pathfinders like Leapmotor, which achieved profitability first through precise cost-effective positioning and control, proving that focusing on the mass market and pursuing extreme efficiency is also a viable path.

In short, the 400,000-unit annual sales lifeline, ongoing price wars, and rising intelligence thresholds are accelerating the elimination process. For the 129 brands still at the table, the harsh reality is that most are destined to exit. The survivors will be powerhouses with adequate scale, comprehensive systems, technological leadership, healthy cash flows, and the ability to continuously create value for users—perhaps only seven, maybe fewer.