Advertisement
China’s EV makers are selling more vehicles at bigger losses, as price war takes its toll
EVs account for more than half of new car sales in China, but brands like Xpeng, Zeekr and Xiaomi face a long road to profitability
Reading Time:3 minutes
Why you can trust SCMP
4
Daniel Renin Shanghai
The earnings outlook for Chinese electric vehicle (EV) makers remains dire even though electric cars now make up more than half of new auto sales in the mainland market, as brutal price competition rages on.
Advertisement
Only two home-grown companies – BYD and Li Auto – are profitable, leaving around 30 rivals under pressure to stem losses despite upbeat sales forecasts in the world’s largest automotive market. The three EV manufacturers that have released second-quarter earnings so far – Xpeng, Zeekr Intelligent Technology and Leapmotor – reported a combined loss of 42.9 billion yuan (US$6 billion).
While the loss narrowed 20 per cent from 53.5 billion yuan a year ago, it has triggered fresh worries that further discounts could cripple the industry.
“Time is against many companies since they need to survive a cutthroat price war,” said David Zhang, general secretary of the International Intelligent Vehicle Engineering Association. “When they run out of cash amid heavy losses, the carmakers will have to fold their businesses.”
Advertisement
The EV penetration rate in mainland China exceeded 50 per cent for the first time in July, propelled by government incentives and fast-expanding charging infrastructure.
Advertisement