China EV market faces battery warranty expiration and shifting energy models

China’s electric vehicle (EV) industry is approaching a significant transition period as the first large wave of early EVs, registered around 2018, begins to exceed their eight-year battery and powertrain warranties starting in 2026. This mass expiration of coverage presents challenges for owners, as battery replacement costs can exceed the total market value of the used vehicles. Additionally, second-hand dealers are increasingly hesitant to purchase these older models due to uncertainties regarding battery health and declining resale values.

Simultaneously, the industry is seeing a strategic shift toward battery swapping technology. While ultra-fast charging has improved significantly, major players like Huawei, CATL, and BAIC are investing in battery swapping ecosystems. This move is driven less by charging speed advantages and more by the economic benefits of the Battery-as-a-Service (BaaS) model. By separating the battery from the vehicle, manufacturers can significantly lower the initial purchase price and reduce vehicle acquisition taxes, helping to stimulate demand in a slowing market.