Summary
- Chinese EV makers are reducing prices and conducting promotions to compete in the market
- Xpeng unveiled budget car models priced under $17,000
- Nio’s deliveries fell in August, but sales are expected to jump with the launch of the new Onvo brand
- Zeekr, controlled by Geely Auto, saw a 15% increase in deliveries in August
- Chinese EV sales accounted for over 50% of total vehicle deliveries in July; only BYD and Li Auto are currently profitable EV builders in China
Article
The electric vehicle market in China is becoming increasingly competitive, with many manufacturers reducing prices and offering promotions to attract customers. Despite the rising penetration of electric vehicles in the market, not every player is seeing higher sales. Overcapacity concerns have led to a discount war among the country’s 50 or so electric vehicle assemblers. However, government subsidies to encourage electric vehicle ownership and investments in charging infrastructure have helped boost sales for some manufacturers.
In August, Shanghai-based Nio saw its deliveries fall slightly from the previous month but still achieved sales of 20,000 vehicles for the fourth consecutive month. The company recently launched a new brand, Onvo, targeting the mass-market EV segment with vehicles priced between 200,000 and 300,000 yuan. This move is expected to increase sales in the coming months. Geely Auto’s premium EV builder, Zeekr, delivered 18,015 units in August, a 15% increase from July. The company also announced plans to design and build hybrid models in addition to pure EVs.
Xpeng, another Chinese EV maker, saw a 26% month-on-month increase in deliveries in August, supplying 14,036 cars to mainland customers. The company recently launched a compact sedan under its new mass-market brand, Mona, aimed at middle and low-income buyers. In July, over 878,000 pure electric and plug-in hybrid cars were sold in China, accounting for over half of the country’s total vehicle deliveries. This marked the first time that EVs outsold petrol cars in the world’s largest automobile market.
Despite the growing sales volume of electric vehicles in China, the profitability of the industry is at risk. Goldman Sachs estimated that the profitability of China’s EV industry could turn negative if manufacturers continue to slash prices. Only BYD and Li Auto are currently profitable among China’s home-grown EV builders. Both companies reported strong second-quarter earnings, with BYD earning 9.1 billion yuan and Li Auto seeing a 86.2% increase in profit from the previous quarter. However, the industry is facing a challenging environment due to pricing pressures and increased competition.
Overall, the Chinese electric vehicle market is experiencing significant growth and competition. Manufacturers are introducing budget car models and targeting mass-market segments to increase sales. The government’s subsidies and investments in charging infrastructure are also contributing to the rising popularity of electric vehicles in the country. However, concerns about overcapacity and pricing pressures are posing challenges to the industry’s profitability. Despite these challenges, companies like BYD and Li Auto are maintaining profitability and seeing strong sales growth, indicating the potential for further expansion in the Chinese EV market.
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