Summary
– Chinese EV makers face intense competition, oversupply, and dwindling sales in China
– More than 200 EV manufacturers in China are struggling, leading to the disappearance of some popular brands
– Aggressive price cuts and overseas expansion are common strategies to counteract oversupply
– Major challenges in the industry include overcrowding, low profit margins, and pressure to boost sales
– Industry experts predict consolidation in the EV market in China with only a few major players surviving by 2030.
Article
The Chinese electric vehicle (EV) market is experiencing a fierce competition among over 200 manufacturers, leading to oversupply and financial challenges. Some smaller companies have already disappeared from the market, and even global automakers are restructuring their businesses. The National Development and Reform Commission predicts intense competition in the industry by 2024, with only a few major players remaining by 2030. The aggressive price war initiated by Tesla has led to price cuts across the industry, squeezing profitability, and causing concerns about sustainability in the long run.
Overcrowding is another major issue affecting the Chinese EV industry, with an estimated 110 new NEV models expected to be launched in 2024, adding to the oversupply problem. Major manufacturers are increasing their delivery targets, but the market demand is not expected to match the supply. Companies like Xiaomi, Meizu, and Huawei are entering the market with new electric car models, further intensifying the competition. The oversupply may force companies to speed up sales and exports to avoid cash flow problems, potentially leading to tensions with trading partners.
Foreign players in the Chinese EV market are facing increased pressure as Chinese brands introduce innovative and competitive products. Tesla, once the bestselling EV brand, has been challenged by BYD, which offers more affordable models. As competition escalates, traditional foreign players may struggle to keep up with the quality and innovation of Chinese cars in international markets. The future of the industry is uncertain, with predictions of a consolidation phase leading to the elimination of small-to-medium-sized companies.
Despite the challenges and competition, some EV companies see a promising future in China’s market. The International Energy Agency predicts that electric cars’ market share could reach 45% in China by 2024 due to competition, falling prices, and policy support. Industry leaders like Gan Jiayue of Geely Auto and Wang Chuanfu of BYD acknowledge the upcoming consolidation and the need for companies to establish economies of scale and brand advantages for long-term success. CEO Yin Tongyue of Chery Auto describes the current landscape as a “life and death race” for EV makers, emphasizing the importance of new product launches and positioning in the market to secure a top position.
Overall, the Chinese EV industry is facing a challenging period of intense competition, oversupply, and financial pressures. Companies will need to navigate through these obstacles by adapting to market conditions, innovating their products, and establishing strong brand presence to survive the industry consolidation. The future of the Chinese EV market holds both opportunities and risks, with the potential for significant growth and market share for those who can navigate the evolving landscape successfully.
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