All seven of China’s largest automakers reported either lower bottom-line profit or a net loss for January-June 2026, despite five recording revenue growth. The companies, each selling more than 500,000 vehicles, were hit by an approximately 20% contraction in China’s domestic new-car market after purchase subsidies and tax breaks for EVs (electric vehicles) and plug-in hybrid vehicles were reduced. BYD, China’s largest EV maker, reported net profit of CNY 12.3 billion, or about $1.8 billion, down 21% from a year earlier and marking its first interim profit decline in five periods. The company’s vehicle sales were believed to have reached roughly 1.8 million units, but record-high inventory and weaker margins prevented volume growth from translating into higher profit. Chinese automakers are responding to weak domestic demand, excess capacity and discounting by expanding sales networks in Southeast Asia, Europe and Latin America. Europe has drawn particular attention despite tariffs, with companies pursuing local production and partnerships. Their earnings recovery will depend on whether they can overcome competition from established manufacturers, regulatory requirements and limited brand recognition while building profitable overseas operations in the second half of 2026.