Putting aside the obsession with direct sales, new energy vehicle manufacturers are flocking to embrace dealers

In the core business districts of first-tier cities, the operating cost of a direct-sale showroom for new energy vehicles can be described as "astronomical."

A practitioner told Tech Planet, "Although there are significant regional differences, with an annual rent of one million yuan and additional rigid expenditures such as employee salaries, utilities, and property management fees, the annual operating cost of a single store can reach five to six million yuan."

For new energy vehicle startups with large-scale layouts, the cost pressure is increasing exponentially.

If calculated based on a scale of 200 stores, the annual investment in opening and operating stores alone would be as high as approximately one billion yuan. This is undoubtedly a heavy burden for new energy vehicle manufacturers that are still struggling to achieve profitability and facing continuous pressure on their profit margins.

Under the dual pressures of cost and market, the direct-sale model, once regarded as the innovation direction in the industry, has failed to replace the traditional dealer system. Instead, it is accelerating the transformation towards a hybrid model of "direct-sale to dealership."

As early as 2021, Tesla, the pioneer of the direct-sale model, was the first to scale back its presence in high-end business districts, closing nine stores in prime locations such as Beijing's China World Mall and Shenzhen's Mixc. In the following years, new energy vehicle brands such as XPeng Motors and Avita followed suit, fully opening up their dealership franchise models to share operating costs and expand their urban coverage.

In the fourth quarter of 2025, this channel transformation reached a climax.

Denza has been gradually closing or transferring its direct-sale stores to dealers in core markets such as Hebei, Henan, Zhejiang, and Guangdong. On the other hand, Hongmeng Zhixing has also launched a large-scale reduction of its direct-sale network, and the channel adjustments in key provinces such as Guangdong, Sichuan, and Jiangsu have been fully implemented. Even Li Auto and NIO, which previously adhered to the direct-sale model, have started to actively explore more cost-effective channel optimization paths.

From leading brands to emerging players, new energy vehicle manufacturers are alleviating cost pressure and adapting to market competition through the transformation and iteration of their channel models. This change is also reshaping the industry's channel landscape.

01

Letting Go of the Direct-Sale Obsession: New Energy Vehicle Manufacturers Flock to Embrace Dealers

The direct-sale model involves vehicle manufacturers independently building 4S stores and service centers, bypassing intermediate dealers and directly connecting with consumers.

A practitioner told Tech Planet that during the rapid growth phase of new energy vehicles, this model did have its advantages. On the one hand, the prices were publicly available, transparent, and unified nationwide, allowing vehicle manufacturers to retain the profits that would otherwise have been taken by middlemen. On the other hand, the direct communication model ensured that brand preferential policies and service standards could accurately reach users, thereby enhancing the consumption experience.

However, the changing industry environment has gradually eroded these advantages.

As the new energy vehicle market has entered a phase of stock competition, the average price of vehicle models has been continuously declining. According to data from the China Passenger Car Association, the average price of new energy vehicles dropped from 184,000 yuan in 2023 to 180,000 yuan in 2024, and further declined to 169,000 yuan in 2025, only slightly rebounding to 174,000 yuan in November, showing an obvious downward trend overall.

The price decline has directly squeezed the profit margin. From January to October 2025, the sales profit margin of the automotive industry dropped to a mere 4.4%, hitting a new low in recent years. The profit advantage of the "no middleman to make a profit" model can no longer cover the high costs of the direct-sale network.

Facing this reality, more and more vehicle manufacturers are choosing to take the initiative to change.

NIO has optimized its layout while adhering to the core direct-sale model. In 2024, it piloted a cooperative franchise model in third- and fourth-tier cities, with partners taking over the delivery and after-sales processes while NIO retained control over the brand and pricing. Its sub-brand, LeDao, directly adopted a hybrid model of "direct-sale + dealer agency" to balance brand control and channel expansion.

Zeekr made a quicker turn. In July 2023, it clearly stated that it would adhere to the direct-sale model and was opening new stores at a rate of one every two days, with over 300 direct-sale stores in 75 cities. However, shortly afterwards, it launched a dealer recruitment program.

Now, Zeekr has established a pattern of "mainly direct-sale with a supplementary partner model." Partner stores are responsible for sales, delivery, after-sales, and other services, while users still place orders and receive invoices through the official app, maintaining a unified national retail price and consistent service standards.

Avita chose to "shift to dealership on a large scale." In May 2024, it included 90% of its stores in the dealership system, only retaining a small number of direct-sale stores in core first-tier cities.

According to a former Avita employee, the sales team at the store where they worked at that time was mostly transferred to the dealership system.

In the fourth quarter of 2025, the channel adjustment accelerated further. Denza accelerated the process of closing or transferring its direct-sale stores to dealers in core markets such as Hebei and Henan. Hongmeng Zhixing also launched a large-scale reduction of its direct-sale network, and currently, its channels are mainly in the form of dealerships, which was confirmed by an employee at a Hongmeng Zhixing dealership store.

02

The Increment Lies in the Lower-Tier Markets: The Channel Battle among Vehicle Manufacturers Intensifies

In addition to the high cost pressure, the limited coverage has also forced vehicle manufacturers to rely on dealers. A dealer told Tech Planet, "New energy vehicle manufacturers need dealers to cover more cities."

Behind this demand is a profound change in the market landscape. In December 2025, the retail penetration rate of new energy passenger vehicles reached 59.1%, but the growth rate slowed down simultaneously. Morgan Stanley even predicted that the domestic passenger vehicle sales volume would decline by 7% in 2026 after excluding exports.

On the other hand, the lower-tier markets are becoming a new growth engine.

The "Analysis Report on the Automotive Market in the First Three Quarters of 2025" shows that the sales volume and growth rate of vehicles in lower-tier cities far exceeded those in first- and second-tier cities. Among them, the sales volume in fifth-tier cities increased by 14.6% year-on-year, nearly three times that of first-tier cities, and the growth rates in third- and fourth-tier cities reached 8.15% and 10.65% respectively. The lower-tier markets have become a "consumption blue ocean" that vehicle manufacturers are vying for.

In this context, penetrating into non-first-tier markets and county-level regions to reach a large number of potential customers has become the key for vehicle manufacturers to break through.

However, the direct-sale model is difficult to support this comprehensive penetration into lower-tier markets. A practitioner said bluntly, "Relying on the direct-sale model, vehicle manufacturers cannot achieve full coverage of county-level regions. At least, the direct-sale and dealer models need to coexist."

The dealer model can help vehicle manufacturers quickly reach the lower-tier markets. Although dealers will take a share of the profits, the overall benefits are more substantial. It can not only share the operating risks for vehicle manufacturers, but also its stores can handle inventory, delivery, after-sales, and other processes, further enhancing the overall profitability of the channels.

The lower-tier markets have become a clear source of growth, and the importance of channel expansion has become increasingly prominent. Therefore, leading vehicle manufacturers have launched targeted channel strategies.

This year, NIO launched a new form of cooperation called "user-owned stores + NIO FL (sales consultants) stationed," and also plans to build comprehensive sales stores that integrate the three brands of NIO, LeDao, and Firefly in lower-tier cities with an existing sales foundation.

Li Auto launched the "Hundred Cities Starry Sky Plan" in May 2025, initiating a partner recruitment program in five provinces, including Guangdong, Guangxi, Yunnan, Guizhou, and Hunan. It innovatively adopted a light-asset model of "self-operated sales + cooperative services" to reduce the cost of channel expansion while expanding the coverage area.

XPeng Motors further strengthened its channel strategy of "dealer-led with direct-sale as a supplement" in 2025. It optimized its layout by reducing inefficient direct-sale stores and allocating more resources to dealer stores, focusing on improving the store coverage rate in third-tier and lower-tier cities and continuously increasing the penetration into the lower-tier markets.

A practitioner said that in the future, the refinement of channel layout and the enhancement of local service capabilities will become the keys for vehicle manufacturers to gain a foothold in the lower-tier markets. The "dealer-led with multiple models complementing each other" will also become the mainstream direction of the industry's channel strategy. "The channel battle around the lower-tier markets will continue to intensify."

03

Channel Game: Direct-Sale under Pressure, Dealers Struggle to Make Profits

As more and more vehicle manufacturers open up their dealer channel layouts, the game of channel models has become a key variable in the development of the new energy vehicle industry, and a battle for channel dominance has officially begun.

The aforementioned practitioner said bluntly that this trend is inevitably accelerating the decline of the direct-sale model. Although new energy brands have stricter control over terminal prices compared to traditional fuel vehicle brands, dealers still have a certain degree of autonomy in price adjustment and are not completely restricted.

A salesperson at a direct-sale store of a new energy vehicle startup told Tech Planet, "The prices at dealer stores are generally a few thousand yuan lower than ours, and some even offer additional benefits such as maintenance packages and decoration gift packages. We have no competitiveness at all in terms of price."

This has led to a continuous diversion of customer flow from direct-sale stores. Many potential customers choose the dealer channel after comparing prices, putting obvious pressure on the sales performance of direct-sale stores.

However, for dealers, even though they can gain a certain advantage in the price game with direct-sale stores, joining the dealer channel of new energy brands is not a "lifesaver."

The survey data on the survival of dealers in the first half of 2025 shows that the proportion of profitable independent new energy brand dealers was 42.9%, less than half. The proportion of loss-making dealers reached 34.4%, slightly lower than the number of profitable dealers.

For those who are trying to enter the new energy vehicle market or transform from traditional fuel vehicle dealers, they also need to bear a heavy transformation cost. The long investment return cycle has further worsened their already tight capital chain.

A salesperson of a new energy vehicle startup told Tech Planet that the upfront investment threshold for taking over a store of a new energy vehicle startup is quite high. Just the processes of renovating the showroom, training professional technicians, and purchasing core equipment require an investment of at least several million yuan.

Once the market sales volume of the brand they represent fails to meet expectations, the order volume allocated to each franchise store will be difficult to cover this high upfront investment, ultimately falling into a dilemma of "high investment, slow return, and difficult to make a profit." In reality, some dealers have fallen into operational difficulties due to the unbearable cost pressure.

Although the hybrid model of "direct-sale + franchise" will become the mainstream in the industry, as market competition intensifies, simply switching the channel model is no longer enough. Refined operation and high-quality user service will become the core competitiveness.

For vehicle manufacturers and dealers, as long as they can balance brand experience and operational efficiency, they can gain a foothold in the new round of competition.

This article is from the WeChat official account "Tech Planet" (ID: tech618), author: Ren Xueyun, published by 36Kr with authorization.