Unprofitable Chinese electric vehicle (EV) Manufacturers, beset by a discount war at home and higher tariffs abroad, are stepping up cost-cutting measures and launching new models as they strive to survive in the cutthroat market.
Only those who can continue operations without resorting to external financing will remain in the country’s EV race as overcapacity problems loom, analysts said.
“As the domestic market becomes saturated and overseas sales in developed economies are hampered by punitive tariffs, key players will have to be very efficient in cost control and refrain from splashy spending to save powder for the difficult business environment ahead lies,” said Chen Jinzhu. , CEO of Shanghai Mingliang Auto Service, an industry consultancy.
“The market has entered a new phase, with all companies expected to soon face a do-or-die moment.”
Among the four unprofitable listed Chinese premium EV makers – Nio, Xpeng, Geely unit Zeekr and supported by Stellantis Jump motor – only Nio reported a larger net loss year over year in the three months ending in September. They all made plans to cut their losses.
The discrepancy between capacity and actual demand is large. By the end of 2023, EV assemblers in mainland China were able to produce 17 million electric cars annually, and the overall factory utilization rate reached 54 percent, according to Goldman Sachs.
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