Gasgoo Munich- China's passenger vehicle market has fully entered a new era dominated by domestic brands.
Forecasts from Gasgoo Automotive Institute paint a stark picture: by 2030, domestic brands are set to capture 80% of the market. Meanwhile, the combined share of European, Japanese, Korean, and American automakers is expected to shrink from around 30% in 2025 to just 20% by the end of the decade.
Running parallel to this shift is the deep penetration of new energy vehicles. By 2030, the combined share of battery-electric, plug-in hybrid, and range-extended models is projected to surpass 80%, rapidly squeezing the space available for internal combustion engine vehicles.
Against this macro backdrop, joint ventures find themselves in a precarious position: the defensive moat of the internal combustion era is being rapidly leveled, yet their new electric beachheads have not been secured. The question of whether these joint ventures still have a future in China has become a focal point for the industry.
Can the Freefall Be Halted?
The overall performance of joint ventures in the first half of 2026 can be summed up as internal combustion stalling out while electrics try to fill the gap—though the recovery is far too slow to offset the decline.
Data compiled by Gasgoo Automotive Institute for the first half of 2026 outlines a shifting landscape: among the top ten joint ventures by sales volume, eight are currently sliding downward.
FAW-Volkswagen secured the half-year crown among joint ventures with sales exceeding 510,000 units, yet its cumulative volume still slipped 31.02% year-on-year. SAIC Volkswagen followed with 338,600 units sold, a 31.2% decline. Meanwhile, FAW Toyota, SAIC GM, Dongfeng Nissan, GAC Honda, Beijing Hyundai, and Dongfeng Honda all posted varying degrees of contraction. Notably, former heavyweights like GAC Honda, Beijing Hyundai, and Dongfeng Honda all failed to clear 100,000 units in the first half.
GAC Toyota stood out as a rare exception in the joint venture camp, defying the trend with 356,000 units sold—a modest 3.29% year-on-year increase.
GAC Toyota's counter-trend performance actually underscores the structural dilemma facing joint ventures as a whole.
A high proportion of hybrid sales provided a bridge between internal combustion and electrification, while the Bozhi series contributed core growth in the new energy sector. This dual-track strategy granted it relative resilience compared to its peers.
Yet, viewed across the entire joint venture landscape, this isolated success feels like a single steady ship in a storm—far from enough to turn the tide.
The systemic threat lies in the core internal combustion engine stronghold, which is being breached by domestic brands on all fronts.
In the 100,000 to 200,000 yuan sweet spot long dominated by joint ventures, volume models like the Corolla, Levin, Civic, and Sagitar are losing ground to domestic new energy offerings like the BYD Qin series and Geely Galaxy. In the premium market above 300,000 yuan, new forces like AITO, Li Auto, and NIO are rapidly eroding the user base of the German luxury trio (BBA).
This pincer attack from both ends has loosened the pricing structures joint ventures built during the internal combustion era. But even more alarming than the loss of market share is the emptiness of their arsenal: joint ventures are severely under-stocked with electrified products just as domestic brands deploy competitive new energy models across every price segment.
The issue has evolved from how much share is lost in a specific segment to a more fundamental question: under the new rules of engagement set by new energy vehicles, do joint ventures even have the capacity to stay in the game?
Currently, the penetration rate of new energy vehicles for joint ventures lags far behind the industry average. Take the Volkswagen brand, for instance: its two joint ventures in China still report single-digit penetration rates—a massive gap compared to the overall market penetration in the first half of 2026.
The rapid contraction of the internal combustion market combined with a delayed transition to new energy has created a double squeeze, pushing joint ventures into their current predicament. The root cause lies in a systemic lag across multiple capabilities.
In terms of product cadence, foreign automakers still require several years for vehicle development, while Chinese domestic brands iterate on a monthly basis. This speed differential means that by the time a joint venture launches a new model, it is often already behind domestic competitors launched in the same period. In terms of intelligence, there is a palpable generational gap in in-vehicle infotainment and driver-assistance features, failing to meet the expectations of Chinese consumers.
A stack of structural shortcomings has combined to land joint ventures in this passive position.
The critical question is whether joint ventures can achieve self-sustaining growth in their new energy businesses before internal combustion engine profits run dry.
Are Joint Venture EVs Finally Gaining Traction?
While the internal combustion business of joint ventures is contracting at an unprecedented pace and the new energy sector is still building momentum, the gap between the two is widening rather than closing. That is the current reality. Yet, if we look at individual market signals, an undeniable shift is underway: mainstream joint ventures are actively exploring ways to compete with local brands on the new energy track.
This shift begins not with a breakthrough in disruptive technology, but with a critical strategic pivot: many joint ventures are finally defining and pricing their new energy products according to the rules of the Chinese market.
The Bozhi 3X, priced between 110,000 and 140,000 yuan, comes equipped with LiDAR for advanced driver assistance. The Audi E7X, with a starting price of 269,800 yuan, has reset perceptions of value in the luxury electric SUV segment. The common thread here is that joint ventures are shedding their past inertia toward premium pricing and configurations, opting instead to face the market with strategies that match—or even beat—local competitors.
Image Source: SAIC Audi
As this strategic adjustment evolves from isolated trials to a collective movement by mainstream joint ventures, the market response is shifting from accidental phenomena to clear trend signals. Sales data compiled by Gasgoo Automotive Institute indicates that the joint venture new energy sector is already showing signs of a breakthrough.
In the first half of 2026, monthly sales of joint venture new energy vehicles climbed from fewer than 120,000 units in January to nearly 180,000 in June. The total for the half-year approached 870,000 units, marking a year-on-year increase of 26.64%.
Looking at specific models, Tesla dominates the foreign-brand new energy top ten list for the first half of 2026, with the Model Y, Model 3, and Model Y L firmly holding the top three spots. GAC Toyota's Bozhi series also performed well; the Bozhi 3X sold 38,900 units in the first half, ranking fourth and becoming the standout new energy model among traditional joint ventures. The Bozhi 7 also delivered a solid performance, with sales exceeding 15,000 units.
Additionally, the MINI COOPER and Buick Zhijing E7 both surpassed 20,000 units in cumulative sales over the first half. While this volume may turn few heads in the broader new energy market, it represents significant progress within the joint venture sector.
The reasons behind these "ripples" in the joint venture new energy market can be analyzed from both supply and demand perspectives.
On the demand side, China's new energy market is undergoing a fundamental shift in its consumer base. As the first wave of tech-savvy early adopters becomes saturated, the market's main force is shifting to mainstream families who prioritize reliability, safety, and peace of mind. Their evaluation criteria are shifting beyond just the richness of smart features to focus on comprehensive dimensions like manufacturing craftsmanship, quality control consistency, safety standards, and after-sales support.
The manufacturing heritage and quality reputation joint ventures built in the internal combustion era have not become obsolete; instead, they are regaining recognition from a segment of users amidst consumption upgrades and market diversification.
On the supply side, mainstream joint ventures are adjusting their product strategies, with the core change being a shift in pricing posture. The Bozhi 3X's transaction price hovers around 130,000 yuan, and the Nissan NX8 starts at approximately 150,000 yuan. Joint ventures are undergoing a comprehensive price reconstruction; the old logic that joint ventures must command a premium over domestic brands is breaking down, replaced by direct competition within the same price bands.
However, the uneven performance within the joint venture new energy sector is also worth noting. Tesla holds a unique position in China, making it an anomaly among foreign new energy players. Once Tesla is excluded from the equation, the overall new energy business of traditional joint ventures remains in its infancy.
Joint venture new energy vehicles are indeed beginning to gain volume, but they remain a considerable distance from true scale.
The Joint Venture EV Offensive
Can joint venture new energy vehicles truly win over Chinese consumers? It remains a valid question.
Currently, the answer hinges on a few core variables: Is there enough market space? Is the product offensive strong enough? Is the business model transformation adequate?
Regarding market space, Gasgoo Automotive Institute forecasts that China's passenger vehicle market will top 31.35 million units by 2030. While the overall scale is expanding, even if domestic brands capture roughly 80% of the market, joint ventures and foreign brands will still retain about 20%—equating to an annual sales volume of over 6 million units.
While this figure pales in comparison to the peak of the internal combustion era, an annual market space exceeding 6 million units still provides a sufficiently large stage for mainstream joint ventures to deploy their product layouts and brand operational capabilities.
In terms of product offensive, mainstream joint ventures are indeed ramping up their new energy deployments with greater intensity.
Volkswagen is leveraging the local CMP platform and CEA architecture to close the gap in intelligent driving, planning over 20 NEV models in 2026—its largest electric push since entering China. Toyota is deepening cooperation with Chinese tech giants like Huawei and Tencent to enhance cockpit and smart experiences. Additionally, Toyota's fifth-generation hybrid technology is rolling out widely, the Bozhi series is expanding, and the bZ series is accelerating its refresh cycle with added features.
The accelerating formation of a product matrix will provide joint venture new energy vehicles with stronger market leverage. Moreover, this dense offensive of new models signals a shift from strategic observation to strategic attack, demonstrating a determination to break through in the new energy race.
Regarding business model transformation, mainstream joint ventures are undergoing a deep reconstruction of their cooperation paradigms. The traditional model—foreign technology input with Chinese manufacturing—is shifting toward "reverse joint ventures," where Chinese technology feeds global operations. The partnership between Volkswagen and XPENG has entered the model implementation phase, while Toyota's collaboration with Huawei and Tencent is deepening. This shift from technology import to co-creation and sharing holds the potential to fundamentally resolve the long-standing lag of joint ventures in intelligence and electrification.
Image Source: XPENG
Yet, the challenges facing joint venture new energy vehicles cannot be ignored. Gasgoo Automotive Institute analysis suggests the joint venture market will accelerate its differentiation, where only the survivors will reign.
First is the stratification of sales volume. While FAW-Volkswagen still stabilizes its half-year sales above 500,000 units, several other former mainstream joint ventures have fallen below 100,000 units this year. This stratification means that while head enterprises still have resources to invest in the new energy transition, tail enterprises—facing continuous bleeding in their internal combustion businesses—are confronting issues of survival rather than development.
Within the traditional joint venture camp, the gap in new energy transition progress is also stark. A structural fault line in penetration rates will dictate short-term growth curves: companies with high new energy penetration possess stronger resilience and growth elasticity, while those with low penetration—or even near-zero levels—face a dual dilemma of having no new growth to rely on and no existing stock to defend in the current market environment.
There is also a fault line in product competitiveness. Divergences in decisions regarding new energy product definition, pricing strategy, and technology introduction are likely to intensify in upcoming product cycles. Companies that complete the logic shift in product definition early will gain a first-mover advantage, while those clinging to old product mindsets will be rapidly eliminated by the market. Products that are overpriced or defined without regard for actual Chinese user needs will find it increasingly difficult to gain traction.
Crucially, there is a gap in decision-making efficiency and localization capabilities. The reason GAC Toyota's Bozhi series achieved volume first in the joint venture new energy sector is its higher degree of localization in product definition and pricing, along with a shorter decision chain. In contrast, some joint ventures' new energy products remain constrained by unified global platform planning, resulting in lagging product introductions, limited configuration flexibility, and rigid pricing—making it difficult to keep pace with China's iteration speed.
In the internal combustion era, a lag in decision efficiency might have meant being "half a beat slow," but in the new energy era, a delay means a product is already outdated the moment it hits the market.
The recent industry debate over "fast-tracked vehicles" is illustrative. Without delving into who is right or wrong, the mere fact that "fast-tracking" has become a core controversy in the auto industry serves as tangible proof of the breakneck speed of car manufacturing in China today.
Summary: Do joint ventures still have a chance? If "chance" means returning to the market dominance of the internal combustion era, the answer is likely no. Domestic brands have established a first-mover advantage and scale effect in the new energy race—a dynamic that will be difficult to reverse in the short term.
However, if "chance" means securing a foothold in the new energy market, retaining core user groups, and achieving sustainable profitable growth, then the answer is yes. The rising volume of some joint venture new energy vehicles is a real market signal: when product strength is sufficient, pricing is reasonable, and intelligent experiences keep up, end consumers do not reject joint venture electric vehicles.
In other words, the opportunity for joint ventures in the new energy era lies not in vying for the leading position against domestic brands, but in leveraging their manufacturing heritage, safety standards, and systemic capabilities to find a differentiated ecological niche. Gasgoo Automotive Institute holds a definitive long-term view of China's passenger market: the market will continue to grow, new energy penetration will deepen, and domestic brands will expand their advantage. But joint brands will not disappear; they will participate in market competition in a completely new form.
Future market opportunities will not be equal for all joint ventures—they belong only to the few who transform fast enough, decide boldly enough, and localize their products sufficiently.
