NIO CEO warns: Auto industry enters final stage, domestic retail sales may fall 15%-20%

Gasgoo Munich- At the China Auto Chongqing Forum on June 13, NIO founder, Chairman, and CEO Li Bin delivered a keynote address assessing the current state and future trajectory of China’s automotive sector. The industry has officially entered its most brutal “final stage,” Li warned, urging the entire sector to brace for impact: full-year domestic retail sales in 2026 could plunge 15% to 20% from a year earlier.

Image Source: NIO

Yet Li remains steadfast in his confidence regarding the future of battery-electric vehicles. He predicts the industry is now entering an accelerated ascent toward the pure-electric tipping point. Citing the latest data, he noted that the domestic penetration rate for pure EVs hit 42.2% in May 2026, a figure poised to keep rising. “This trend is irreversible,” Li emphasized.

Li Bin‘s assessment of current trends underscores the structural rift now tearing through China’s auto industry—a sharp contraction in overall volume coupled with accelerating internal polarization.

The cruelest final stage is no longer the industry buzzword of years past; it is a genuine test of survival. On one side, the demand pool is visibly shrinking under macroeconomic pressures and consumer hesitation. On the other, the accelerating momentum of new energy vehicles—particularly pure electrics—is beginning to displace internal combustion engine vehicles in a squeeze play.

This displacement is not an incremental shift but a zero-sum game within a flat—or even shrinking—market. It implies that for every pure EV sold, more than one gasoline car may be forced out. Yet the capacity, distribution channels, and R&D investments tied to combustion engines cannot vanish overnight. The resulting asset impairments, inventory burdens, and turmoil within dealer networks represent immediate pressures the entire sector must confront.

Li’s address at the 2026 Chongqing Forum effectively maps out a dual timeline for the industry. In the short term, automakers must fight a battle for cash flow amidst market downturn expectations—a struggle that will be excruciating with no shortcuts. In the long term, however, the irreversible rise of pure-electric penetration, combined with reconstruction opportunities born of this era of brand chaos, leaves room for companies with true endurance and technological depth to leap ahead. The tension between these two timelines will test the strategic resolve of every automaker.