A Culling Looms for China’s Crowded EV Industry

Sparks are flying in Munich, where, at the city’s annual auto show this week, BYD’s executive vice president predicted that just a handful of Chinese EV-makers will survive long term. The exec, Stella Li, said even 20 EV manufacturers is “too much” and many will be “pushed out.” There are currently about 130 Chinese EV companies.

Li’s prediction is in line with an estimate from consulting firm AlixPartners, which said 15 Chinese EV brands will be viable financially by 2030. BYD rival Xpeng said in 2023 that just 10 would survive the next five to 10 years. 

Euro Summer for Chinese EVs

More than a dozen Chinese EV-makers showcased their latest electric models this week at the Munich Auto Show, where EU brands dominate the showroom floor. As competition revs up back home, Chinese EV-makers are expanding their presence abroad:

• The country’s EV brands have been racing to the bottom in aggressive domestic price wars that Beijing officials have criticized for contributing to nationwide deflation. Price-slashing has also hit companies’ earnings as they take on debt to stay competitive on the lot. As a domestic shakeout looms, Chinese companies are looking abroad, where prices are higher. 
• BYD has more than doubled the number of models it sells in the EU over the past two years and plans to have more than 1,000 EU stores running in 32 countries by the end of this year, Li said at the show. The world’s leading EV-seller plans to make all its EVs locally for EU markets within three years, helping it avoid tariffs. Changan, a government-owned EV brand, also announced its UK launch at the Munich Auto Show. 

Heavy Traffic: Chinese brands merging onto the global highway could push other EV-makers off the road. Volkswagen showed off a new budget EV at the Munich Auto Show to compete with Chinese sellers’ rock-bottom prices — the ID.polo, aka the “people’s car,” is expected to cost less than $30,000. Other brands, like BMW and Mercedes-Benz, are counting on customers to keep paying more for better performance. Chinese companies may need customers to pay more soon, too: Citi cut its forecast for BYD’s sales next year by more than a million cars.