According to a report global consulting firm AlixPartners, just 19 of China’s 137 current electric vehicle (EV) brands stand to remain profitable by the end of 2030. The report, which was cited by Bloomberg, stated companies that are unable to turn a profit are likely to exit the industry, consolidate or battle for a minor market share.
One such company that has fallen is WM Motor, which filed for bankruptcy last October after struggling with growing debts and losses. The price war that has been ongoing in China for almost two years has resulted in significantly reduced margins for some EV makers and looks to continue as larger firms such as BYD and Tesla focus on strengthening their dominant positions.
“As long as big players such as BYD still have a gross margin, there’s always room for a further price war,” said Stephen Dyer, AlixPartners’s Shanghai-based managing director. In the past year, the average sale price of cars in China fell by 13.4%, although the average margin of automakers grew by 7.8% in 2023 from 6.3% in 2022. This is driven by cost-cutting measures involving suppliers as well as expediting the release of new models to the market.
By the end of the decade, Chinese automakers are predicated to command 33% of the global automotive market and 45% of new energy vehicle (NEV) sales. Even so, AlixPartners sees market share for Chinese automakers in Europe to dip to 12% from 15% due to the European Union’s imposition of additional provisional tariffs.
A rather eye-catching discovery in the report is that staff at Chinese automakers can do as much as 140 hours of overtime a month, which is seven times more than the maximum 20 hours of overtime done by workers at legacy automakers.
The increased productivity resulting from this has helped Chinese automaker push deliveries, while other initiatives to increase competitiveness include national level investment in battery and material technologies with robust vertical integration involving suppliers, separating the development of hardware and software, setting up independent NEV brands as well as local government support.
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And many of them trying to clear their EV graveyards by dumping it to Southeast Asia. The best part is many here are praising the craps even though they are not buying themselves.
Umm so what is the problem? We are not really an auto producer (proton is geely, perodua is toyota). more competition and more ckd setup in malaysia is a good thing since its more investment and jobs created.
i am glad with the car options available in malaysia, no more just the handful of resting in their laurels japs and euro marques. its a wake up call for them.
These China EV companies will always be competitive in a price war. What corners they cut are another matter all together… and they WILL cut corners.
The report shows that there is abuse of workers to work for long hours, this can result in low quality due to less rest and less focus
Why a rear diffuser on front bumper