China’s car exports jump 73% in May as Iran war fuels EV demand

China Car Exports Surge 73% in May as War-Driven Fuel Prices Boost EV Demand

China’s passenger car exports jumped 73% year-on-year in May to approximately 809,000 vehicles, the China Association of Automobile Manufacturers reported on Wednesday, as rising fuel costs linked to the war in Iran accelerated global demand for electric vehicles.abcnews

Exports of pure battery-electric and plug-in hybrid vehicles more than doubled from a year earlier to about 435,000 units, accounting for more than half of all passenger cars shipped abroad. The figures mark another month of record-level overseas shipments for Chinese automakers, following April’s 796,000-unit total, and put the industry on pace to exceed 10 million vehicle exports for the full year.cnevpost

Global Fuel Prices Propel EV Interest

The conflict in Iran, which began in late February, has pushed gasoline and diesel prices higher across much of the world, giving Chinese EV manufacturers a tailwind in markets from Europe to Latin America. New EV registrations in Europe jumped 34% year-on-year in April, according to data from New Automotive and E-Mobility Europe shared with Reuters.reuters

“The high oil price certainly has translated into further higher interest on the EV,” said Paul Gong, head of UBS China automotive industry research, as quoted by the Associated Press.abcnews

BYD, China’s largest EV maker, sold over 160,000 vehicles abroad in May, an 80% increase from the prior year and the first time overseas deliveries exceeded 40% of its total sales. The company aims to sell 1.5 million vehicles overseas in 2026, up more than 40% from last year’s 1.05 million.bnnbloomberg

Domestic Market Continues to Shrink

While exports boomed, domestic passenger car sales fell 23.4% from a year earlier to 1.44 million vehicles, marking the seventh straight month of year-on-year declines, according to CAAM data. Sales of internal combustion engine vehicles fell almost 42% from the year before as EVs claimed an ever-larger share of the market.abcnews

China’s NEV retail penetration reached a record 62.9% in May, exceeding 60% for a second consecutive month, according to the China Passenger Car Association. The domestic downturn has been driven in part by the introduction of a 5% EV purchase tax in 2026 and the end of previous subsidies, which pulled forward demand into late 2025.youtube

Outlook

UBS analysts expect China’s annual passenger car exports to rise about 40% in 2026, with EV exports possibly up around 80%. Claire Yuan, an auto analyst at S&P Global Ratings, forecasts year-on-year export growth of 30% to 50% and expects domestic sales to recover in the second half as automakers launch fresh vehicle lineups.abcnews