China New Energy Car Sales Rebound, With Help From High Fuel Prices

China's new energy vehicle market showed a strong recovery in March as sales rebounded from February figures affected by the 10-day Chinese New Year holiday and as soaring global oil prices from the Iran war made energy-efficient cars more attractive to some consumers.

March sales in the domestic market topped 784,000 units, an increase of 69 percent from February, according to the China Passenger Car Association. Sales may be below comparable 2025 levels, but they are good news in an industry where forecasts of a slower 2026 prevailed before the Iran war began.

Among the emerging electric vehicle startups, Leapmotor took the crown with 50,029 units delivered, a 78 percent month-on-month gain. Nio was second, with a 70 percent rise in sales to 35,486 vehicles. The success was largely down to its ES8 SUV.

"The Nio ES8 completed an accumulated 80,000 vehicle deliveries in March, achieving this milestone in 181 days," the company said in its monthly report. "For three consecutive months, it has claimed the sales championship in the large SUV segment, regardless of powertrain type, price range or seating capacity."

Industry leader BYD's report showed March sales reaching 300,222 units, breaking rival Geely's two-month lead in monthly sales.

Rising international oil prices continue to impact mainland fuel costs, becoming a factor of increasing of new energy vehicle sales in March. Since the beginning of 2026, the cumulative retail prices of gasoline and diesel increased by nearly 2 yuan (29 US cents) a liter.

Based on a vehicle with a 50-liter fuel tank, filling up costs about 87 yuan more, pushing up monthly driving expenses by over 130 yuan, nearly 100 yuan more than the end of last year.

That trend is expected to continue.

According to Chinese commodity market information provider JLC, domestic retail prices for gasoline and diesel on the Chinese mainland are expected to increase by 95 yuan (US$13) per ton in the coming week, translating to a hike of about 0.08 yuan per liter. The final increase will depend on the future performance of oil prices.

Rising gasoline prices are a headache for motorists everywhere in the world.

According to Global Petrol Prices website, the US-dollar-equivalent price at gas pumps across the world on March 30 was highest in Hong Kong at US$4.10 per liter. In the UK they stood at US$1.98, and Germany's price was US$2.42. In Asia, Japanese motorists were paying the equivalent of US$1.13 a liter, and in South Korea, prices were up to US$1.38.

Many consumers are now viewing alternatives to combustion-engine vehicles as an investment in energy security.

"It is indeed quite frustrating how we again talk about EVs as if we didn't know that this is the structural measure to wean our transport system off oil," Julia Poliscanova, senior director for vehicles and e-mobility supply chains at the campaign group Transport & Environment in Europe said in an interview with CNBC. "I do think that this crisis might be different. In the past, there would be a crisis and then quite quickly, as soon as the crisis was over, we'd go back to business as usual when oil and gas are flowing."

The rising strategic importance of energy security is revealed in China's exports of new energy vehicles in March.

BYD's overseas sales surged 65 percent in the month to about 120,000 NEVs, accounting for about 40 percent of total monthly volume. During a recent earnings call, BYD's management set a 2026 overseas sales target of 1.5 million units, up 30 percent from the January target.

Similarly, Chery Group exported 148,800 vehicles in March, a 72 percent year-on-year increase, while Zeekr's exports hit 81,600 units, surging by 120 percent.

Favorable Chinese policies continue to be rolled out to encourage green driving on the mainland.

Tesla reported electric car shipments from its mega-factory Shanghai, which include both domestic and overseas shipments, surged 46 percent in March from February to 85,670 vehicles, a high for this year.

In China, policies are still steering consumers to green driving.

"Local subsidy policies were fully implemented across China in March, effectively stimulating consumer demand for car purchases," said Cui Dongshu, secretary general of the China Passenger Car Association. "New energy vehicles scheduled for this year will be launched one after another, with the new energy market expected to rebound."

He added, "There is a time gap from technology release and pre-sales to actual delivery, and this anticipated volume increase was not fully reflected in the March data."

BYD is one example. Despite the month-on-month gain, its March sales were still down 21 percent from a year earlier, primarily because the company released only a few new models in the month. The releases included the company's new

"flash charging" technology, but the feature wasn't included yet on plug-in hybrid models.

The company is planning to roll out flash charging products across all cars and ramp up production capacity through June, with sales growth in overseas markets expected and a sales offensive campaign set to begin.

Major automakers are gearing up for this month's Beijing International Automotive Exhibition, where a wave of product offensives will kick off, with them hoping to inject new momentum into the auto market.