Q2 EV Sales of Japan's Carmakers in China: Only Honda Sees a Decline

According to Nikkei News, Honda's electric vehicle sales in China have stagnated due to high pricing and a lack of driver assistance features, making it difficult for the Japanese automaker to establish brand influence in the world's largest automotive market.

Image source: Honda Motor

Data shows that in the second quarter of this year, Honda's electric vehicle sales in China fell by 2% year-on-year, totaling only 2,900 units. Despite the company launching two new SUVs, the Honda S7 and P7, in the Chinese market this spring, the situation has not been reversed.

The Honda S7 and P7 SUVs are reportedly underperforming in the Chinese market. Both new models are built on a dedicated platform developed locally in China and are the first models in Honda's "Ye" series. This series was supposed to play a key role in Honda's goal of achieving full electrification of new car sales in China by 2035.

It is worth noting that, according to sales data from the second quarter of this year, Honda is the only Japanese automaker whose electric vehicle sales in China have declined. In sharp contrast, Toyota's electric vehicle sales in China surged by 57% year-on-year during the same period, reaching 26,000 units, while Nissan's electric vehicle sales in China soared by 160% year-on-year to 16,000 units.

One of the core issues in the aforementioned situation is Honda's pricing in the Chinese market. The initial price of the Honda S7 was 259,900 yuan (approximately 36,335 USD), but just a month after its launch, Honda was forced to reduce the price by 60,000 yuan, a decrease of 23%. Honda stated that this price adjustment was "to make it easier for consumers to purchase," but the consumer response was lukewarm.

Vehicle performance is also subject to market scrutiny. Although the Honda S7 boasts a range of 650 kilometers—superior to the Tesla Model Y’s 593 kilometers—it falls short in driver assistance technologies, an aspect highly valued by Chinese consumers. The Honda S7 and P7 are equipped with Honda’s self-developed “Honda Sensing 360+” advanced driver assistance system, which supports features such as highway lane changing.

However, the Honda S7 and P7 are not equipped with the "hands-free driving" feature on highways and general roads—a function that has become relatively common in the Chinese market. Due to the absence of the widely offered "Navigation On Autopilot (NOA)" feature provided by competitors, the industry considers these two Honda models to be technologically lagging behind.

In contrast, Toyota and Nissan have driven the growth of electric vehicle sales by offering high cost-performance. Toyota launched the bZ3X model in China in March this year, priced at 109,800 yuan, with sales reaching 17,000 units in the second quarter. This model also features NOA functionality through a collaboration with Chinese autonomous driving startup Momenta.

The N7 sedan, launched by Nissan this April with a price of 119,900 yuan, also incorporates Momenta's technology and received 17,000 orders in its first month on the market. Ivan Espinosa, Chief Executive Officer of Nissan Motor, stated that the success of this model is due to its “deep alignment with the needs of the Chinese market.”

Toyota Motor and Nissan Motor have long adopted competitive pricing strategies in the Chinese market. Given that Chinese local automakers launch new electric vehicles almost every month, these two Japanese automakers are concerned that if their new models do not quickly gain acceptance in the Chinese market, they risk being eliminated from the market.

Honda has previously launched several electric vehicles in China, such as the e:N series introduced in 2022 and the budget-friendly model "Lingxi L" aimed at young consumers last year. However, none of these EV models, including those under the "Ye" brand, have achieved the goal of "monthly sales exceeding ten thousand units," and their market popularity remains limited.

Honda's "Ye" brand will introduce Momenta's driving assistance features. Given China's unique traffic environment, Masayuki Igarashi, Honda's operating officer for China, stated, "Collaborating with Momenta, which has strong research and development capabilities, to conduct joint research and promote technology commercialization will become our competitive advantage in the future."

Honda also plans to align with the trend in the Chinese market that emphasizes "driving enjoyment." The company intends to equip its vehicles with an artificial intelligence system developed by the startup DeepSeek, enabling "driver-vehicle interactive dialogue"—a feature that has become increasingly common in models from Chinese automakers.

At the same time, Honda is also striving to improve price competitiveness in the Chinese market. The company plans to use lithium iron phosphate (LFP) batteries for the first time in its third wave of new electric vehicles launched in China. Since this type of battery does not require rare metals and has lower costs, it helps reduce the overall production cost of the vehicles.

Over the past two decades, Honda has built a certain level of brand trust in China. However, in the field of electric vehicles, the company needs to better align its pricing and features with the needs of Chinese consumers.

Currently, Chinese electric vehicle manufacturers are rapidly rising. It is reported that BYD's global sales in the first half of this year increased by 33% year-on-year, reaching 2.14 million units, with its global ranking rising from tenth place in the first half of last year to seventh place. China's second-largest automaker, Geely, also climbed from eleventh to eighth place. Notably, this is the first time that BYD and Geely's sales in the first half of the year have simultaneously surpassed Nissan, while Nissan fell out of the top ten global best-selling automakers in the first half of 2025.

However, in the Chinese market, the price war is intensifying. In July, BYD's sales in China only slightly increased to 340,000 units, a sharp slowdown compared to previous double-digit growth rates. As competitors continue to launch low-priced electric vehicles into the market, it has become increasingly difficult for automakers to maintain high-speed growth.