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For a long time, it looked like Volkswagen had permanently lost its footing in its most important market. But the first months of 2026 bring the turnaround: Volkswagen is back at the top of China's car market.

Details

In January and February, VW's joint ventures reached 13.9% market share – just ahead of Geely (13.8%) and well ahead of BYD, which crashed to 7.1%. 4th place instead of 1st.

The reason: Beijing ended purchase tax exemptions for e-cars and cut subsidies for trade-ins.

VW's counterpunch

The German group is betting on radical localization: First co-development with Xpeng rolling off the production line, 20+ new EV models coming in 2026 for China alone.

BYD counters with first major battery upgrade in six years – but the numbers show: Without state help, it's tight.

Despite reclaiming the top spot, the situation remains tense for Volkswagen. After-tax group profit collapsed by 44% to €6.9 billion last year – the weakest result since Dieselgate.

• VW plans to cut around 50,000 jobs nationwide by 2030 to reduce transformation costs.

Li Auto, once China's poster child for profitable EV making, posted an operating loss of 520 million yuan ($75 million) in 2025. Just a year earlier, the company had booked 7 billion yuan in operating profit.

• Revenue: -22.3% to 112.3 billion yuan ($16.3 billion).

• Deliveries: -18.8% year-on-year.

The details

The slide happened fast. In 2023 and 2024, Li Auto was one of the few profitable EV makers in China, with operating profits of 7.4 and 7 billion yuan respectively.

The MEGA disaster: In March 2024, Li Auto launched its first all-electric model. The minivan flopped. In July 2025, a crash-test video of the i8 turned into a PR nightmare. The pure-electric push ate into margins and credibility.

Q4 shows early stabilization:

• Net income: 20.2 million yuan (after Q3 losses).

• Vehicle margin: 16.8% (Q3: 15.5%, but Q4 2024: 20.3%).

• Free cash flow: back to positive at 2.5 billion yuan.

The full-year picture tells a different story: Operating cash flow swung from +15.9 billion yuan (2024) to -8.6 billion yuan. Free cash flow dropped from +8.2 to -12.8 billion yuan.

The cushion holds: Li Auto is sitting on 101.2 billion yuan ($14.7 billion) in cash. Enough to fund a turnaround without going back to capital markets.

The AI pivot

In November 2025, CEO Li Xiang officially declared the company an “Embodied Intelligence” firm. Half of its 11.3 billion yuan R&D budget is now being allocated to AI.

In January 2026, the engineering teams were reorganized, including the creation of a new humanoid robotics division. For 2026, Li Auto is planning 12 billion yuan in R&D spending, with around half going to AI, chips, and autonomous driving.

Li Xiang himself has called 2026 “the most competitive year” in China’s premium segment. Even so, he is still targeting 20% sales growth in the core auto business.

👉 Sources: Caixin, Kr Asia

"It was a strategic mistake for Europe to turn away from reliable energy"

The EU Commission wants to invest €200 million in mini reactors (SMR), first commissioning in early 2030s.

In Asia, development is already much further along:

China's nuclear marathon

59 reactors in operation, 28-36 under construction – more than any other country. Beijing approved ten new reactors in 2025 ($27 billion) – 10+ per year for the fourth consecutive time.

• Construction time: 5 years per reactor (vs. 10-15 years in Europe/USA)

• 2035 target: 200 GW capacity (currently 62 GW)

• Technology: World's first Gen-IV high-temperature reactor (2023), thorium experiments underway

China is already exporting: Target is 30 reactors in Belt & Road countries by 2030, revenue $145 billion.

South Korea: 80% approval

Public polls showed 80%+ support for nuclear power.

26 reactors deliver 31.7% of electricity. Plan until 2038: Two new large reactors (2.8 GW) plus first commercial SMR (700 MW).

Japan after Fukushima

15 years after the disaster, 15 of 33 reactors are running again.

Target by 2040: 20% nuclear power (currently 9%).

Korean conglomerates are reducing their dependence on China.

Korean retail investors are doing the exact opposite: they are pouring hundreds of millions of dollars into funds that bet on China’s humanoid robotics supply chain.

The details

Seven humanoid robotics ETFs are listed on the Korea Exchange: two focused on Korea, two on the US, two on China, and one global.

• China ETFs: $444 million in assets under management.

• Korea ETFs: $465 million, almost on par.

• US ETFs: $288 million, significantly less.

The two China products come from Mirae Asset and Samsung Asset Management.

Mirae Asset’s fund, launched in May 2025, tracks China’s entire robotics supply chain and has gained 43% since listing. Samsung’s equivalent is slightly negative. US-focused robotics ETFs are up 15–30%, while one global fund has returned as much as 60%.

Margin vs. volume

In November, Goldman Sachs surveyed nine Chinese suppliers, including Sanhua and Tuopu Group. These companies are planning capacity for 100,000 to 1 million robot units per year, even though no large-scale orders have been confirmed yet.

At Agibot, Unitree, and UBTech, currently the largest humanoid producers by unit volume, the supply chain is almost entirely Chinese.

Lee Jong-min of Mirae Asset compares the robotics supply chain to the EV industry: motors, actuators, rare earths, the critical components for humanoid robots, are in some cases sourced exclusively from China.

• The investors’ bet: if unit volumes rise, margins will scale across the entire supply chain.

• The same bet worked five years ago with EV suppliers, before CATL and BYD came to dominate the global market.

• On top of that, China’s stock market is valued much more cheaply relative to GDP than the US market, leaving room for a rerating.

👉 Sources: Korea Herald, Business Korea, Humanoids Daily

China's largest household appliance manufacturer Midea is investing 60 billion yuan ($8.7 billion) in AI and robotics over the next three years.

The sum equals the entire R&D spending of the past five years. In one fell swoop, Midea is thus doubling its research pace.

The Kuka factor

The company is not new to the robotics business. In 2017, Midea bought German robotics giant KUKA for 29.2 billion CNY (around €4 billion) and built China's largest industrial robot production base in Foshan, Guangdong.

• A new robot rolls off the line there every 30 minutes, over 80,000 units so far.

In December came the next step: Miro U, a six-armed humanoid on wheels. In a washing machine factory in Wuxi, it increased efficiency in line conversions by 30%.

Entire industry follows suit

Midea is not alone. China's home appliance manufacturers are mutating into robotics companies:

• Gree Electric: 2,000 self-developed industrial robots in Zhuhai factory

• TCL: AI-controlled human-machine collaboration, one operator controls 384 ovens

• Skyworth: AI equipment for all products from January 2026

Timing is no coincidence

Next week, Nvidia GTC 2026 starts, where new physical AI models are expected.

At the same time, Tesla is preparing the launch of Optimus Gen 3 for the second quarter.

• China doesn't just want to keep up here, but dominate the market: The domestic humanoid market is expected to grow to 300 billion CNY ($43.8 billion) by 2035.

The Chinese EV maker Nio posted a profit in the fourth quarter of 2025 for the first time since its founding. After ten years of losses and billions in burned capital, this marks a turning point.

Q4 net profit: 282.7 million yuan ($40.4 million) vs. a net loss of 7.1 billion yuan a year earlier.

The details

Revenue rose 76% to 34.7 billion yuan ($5 billion), while vehicle sales jumped 81%. In the fourth quarter, Nio delivered 124,807 cars, up 72% year over year.

The key driver was the ES8, Nio’s premium SUV with a starting price above 400,000 yuan (about $56,000) and a gross margin of around 20%. That model alone accounted for 46% of all deliveries in December.

At the same time, Nio cut costs aggressively:

• F&D expenses: -44% to 2 billion yuan ($286 million)

• Sales and administrative expenses: -28% to 3.5 billion yuan ($500 million)

• Overall margin: from 11.7% to 17.5%

For 2026, Nio is targeting more than 450,000 deliveries, up from 326,000 for full-year 2025. In the first quarter, the company expects 80,000 to 83,000 vehicles, up around 90% year over year, but a noticeable decline compared with Q4.

The stock reacted accordingly: +15% in New York to $5.70, bringing market capitalization to around $14.4 billion.

Margin vs. volume

For years, Nio was seen as a textbook example of how brutal the price war in China’s EV market has become. The fact that a premium carmaker is now the first startup to turn profitable shows that margin beats volume.

• For comparison: BYD achieved a gross margin of 17.6% in 2025 with 4.6 million cars sold. Nio reached 17.5% with 326,000 units.

The question is whether Nio can sustain that profit. Its 2025 full-year operating loss still stood at 11.5 billion yuan ($1.6 billion), and Q1 2026 is expected to be weaker.

👉 Sources: NEVPost, Caixin, Yicai

China’s export machine is running at full speed. In January and February, exports rose by 21.8%, three times stronger than economists had expected.

• The trade surplus of $213.6 billion is the highest two-month figure ever recorded.

The numbers in context

China traditionally combines the data for January and February to smooth out holiday effects from the Lunar New Year.

Analysts had forecast growth of 7.1%, and both Reuters and Bloomberg missed the mark. Instead of slowing after the record year of 2025, with a surplus of $1.2 trillion, the pace is accelerating.

• Import growth: With an increase of 19.8%, China’s domestic market is also showing surprising resilience despite the property crisis.

The great detour

The trend toward the “de-Americanization” of Chinese trade flows is accelerating. Beijing is finding new buyers at record speed.

The pattern is even more drastic on the import side: China is buying 43% more from India and 36% more from South Korea, but 27% less from the US.

Tech as the turbocharger

One driver stands out: semiconductors and technology exports. The global AI boom is pulling demand for Chinese chips and components higher.

“The strength in integrated circuits fits with the AI investment boom,” says Xu Tianchen, Senior Economist at the Economist Intelligence Unit.

Hyundai Motor Group is preparing to list its US robotics subsidiary Boston Dynamics on the Nasdaq.

What looks like a tech IPO on the surface is actually a strategic maneuver: Group Chairman Chung Euisun needs the money to untangle Hyundai's complex cross-shareholding structure.

Chung's personal 20% stake in Boston Dynamics: estimated $13.6 billion (20 trillion won).

The details

Hyundai acquired Boston Dynamics from SoftBank in June 2021. Group affiliates paid $660 million for 60%, Chung personally added another 20%. Combined, the group holds 80%.

The pressure to list is mounting: At the time of acquisition, Hyundai committed to taking Boston Dynamics public within four years. That deadline lapsed in June 2025, giving SoftBank the right to exercise a put option until June 2026.

Hyundai is serious about this step: The company has already set up a dedicated robotics and AI task force under Vice Chair Chang Jae-hoon. In February 2026, Boston Dynamics' CEO also stepped down to refocus on profitability.

Why this isn’t really about robots

Hyundai is the last major Korean chaebol still operating with a circular ownership structure. At the top sits parts-maker Hyundai Mobis, which controls Hyundai Motor with a roughly 22.4% stake. Chung himself holds just 0.3% of Hyundai Mobis.

To secure long-term control, Chung needs to increase his Mobis stake by buying out shares from Kia and Hyundai Steel. On top of that, inheritance and gift taxes on his father's shares will eventually come due.

All of this costs billions, and the Boston Dynamics IPO is supposed to provide exactly that.

👉 Sources: Korea Herald, The Investor

South Korea's President Lee Jae Myung ordered something on Monday that hasn't happened since the 1990s: a state price cap on gasoline and diesel.

The reason: The Iran crisis has driven the oil price to over $118 per barrel, and South Korea sources around 70% of its crude oil from the Middle East.

The price shock

The government will implement a system of maximum prices for petroleum products to protect the domestic economy from the energy shock.

"The crisis is a significant burden on our economy, which is heavily dependent on global trade and energy imports from the Middle East."

All of Asia suffers

China as relative winner?

While South Korea and Japan are extremely vulnerable, China (although the largest importer) is better buffered.

Beijing has massively hoarded crude oil over the past year and has greater capacity to substitute oil with coal or natural gas. The crisis could thus paradoxically strengthen Beijing in the regional power balance vis-à-vis its rivals.

The world’s largest EV battery maker, CATL, posted record 2025 revenue of 423.7 billion yuan ($61 billion), up 17% from the previous year.

Net profit came in at 72.2 billion yuan ($10.4 billion), up 42.3%, marking the fastest profit growth in three years.

Q4 alone: profit jumped 57.1% to $3.35 billion.

The details

It is the ninth consecutive year at the top for battery giant CATL.

• Battery sales: 661 GWh (+39%). Of that, 541 GWh were EV batteries, up 41.85%.

• Global EV battery market share: 39.2%.

• BYD stands at 16.4%, less than half.

The more interesting part lies outside the core business: in energy storage, gross margin reached 26.7%, above the 23.8% in the EV battery business.

The reason: AI data centers and power grids are driving demand, and the segment now accounts for 14.7% of total revenue.

Despite Trump’s tough stance on China: Ford wants to use CATL’s licensed technology to expand its own energy storage production. JPMorgan sees this as a growing foothold in the US market.

CATL vs. BYD:

• BYD last week unveiled its new Blade Battery, which is supposed to deliver 1,000 km of range after nine minutes of charging.

• CATL’s Shenxing cell delivers 520 km after five minutes. At the same time, CATL is developing batteries for trucks, ships, and aircraft.

Where this is heading

Founder Robin Zeng himself warns that geopolitics, industry cycles, and technological disruption are overlapping. The fact that CATL is now generating higher margins in storage than in its core business shows the direction: away from pure volume chasing in EV batteries, and toward high margin infrastructure deals.

👉 Sources: SCMP, DealStreetAsia, Nikkei, BusinessTimes