China's EV price war dashes profit hopes of 90% of brands, AlixPartners says
However, the country's top EV players were expected to double their market share in Europe to 10 per cent by 2030, the consultancy said in its latest report on the global car industry on Thursday.
Of the 129 EV brands currently produced by about 50 carmakers, only 10 of them - up to 15 in an optimistic scenario - were expected to become profitable by 2030, and they could account for nearly 75 per cent of the mainland's EV market, said Stephen Dyer, Greater China co-leader and head of Asia automotive practice at AlixPartners.
'China is one of the most competitive new-energy vehicle markets in the world, with intense price wars, rapid innovation and new entrants constantly raising the bar,' he said. 'This environment has driven remarkable advances in technology and cost efficiency, but it has also left many companies struggling to achieve sustainable profitability.'
Dyer said the number of profitable EV makers could fall to fewer than 10 by 2030 if the unrelenting discounts continue, further squeezing profit margins.
By 2030, EVs – which comprise pure electric and plug-in hybrids – would account for 76 per cent of the mainland's new car sales, or 20 million units, AlixPartners estimated.
China was the world's largest automotive market in 2024, with EV sales accounting for more than 60 per cent of the global total, according to the China Passenger Car Association.
But only half of the nation's EV production capacity of 20 million units a year was utilised in 2024, according to AlixPartners.
Among the mainland EV builders, only BYD, the world's largest EV maker; Li Auto, Tesla's nearest rival in China; and Aito, backed by telecommunications equipment giant Huawei Technologies, are profitable.
Dyer said an ongoing discount war could accelerate the pace of consolidation in China's EV sector, with players selling fewer than 1,000 units a month likely to be edged out soon.
Chinese carmakers cut prices on a total of 70 EVs and petrol models in the final week of May, according to the 21st Century Business Herald newspaper, capitalising on state subsidies to draw buyers. Beijing offers a 20,000 yuan (US$2,790) trade-in rebate for EV purchases and 15,000 yuan for petrol-powered cars. EV buyers are also exempt from paying a 10 per cent sales tax.
Chinese EV builders were also leveraging cost advantages and other incentives, such as insurance subsidies, cash rebates and zero-interest financing, to maintain market share and improve affordability, Dyer said.
Nick Lai, head of auto research in Asia-Pacific at JPMorgan, told the Post in May that buoyant exports would help shore up Chinese EV makers' profitability because their cars enjoy bigger margins overseas.
AlixPartners predicted that Chinese EV makers would boost their annual production in Europe by 800,000 units by 2030, without providing details.
Chinese EVs face additional tariffs of 17 to 35.3 per cent in the European Union since October following a year-long anti-subsidy investigation. - SOUTH CHINA MORNING POST
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Star
4 hours ago
- The Star
Roundup: Kenyan visitors flock to Chinese products at annual trade expo
NAIROBI, July 8 (Xinhua) -- Braving the chilly Tuesday morning in the Kenyan capital, Nairobi, George Owino and a group of friends took a leisurely stroll through the exhibition hall hosting the tenth edition of China Trade Week. The engineering graduate turned entrepreneur said he visited the premier event to meet potential Chinese manufacturers or distributors of construction equipment for his clients across the country. "I happen to serve clients who are keen on the quality and durability of products such as those on display at this expo, ranging from pumps, electric cables, tiles and roofing materials," said Owino. He said his visit to the expo was worthwhile, as he connected with some Chinese partners who could help facilitate the bulk import of lighting equipment for a client on the outskirts of Nairobi. Over 100 exhibitors, including more than 80 from China, are showcasing their products at the 10th edition of China Trade Week, which runs from Tuesday to Thursday and features high-level panel discussions and business matchmaking. David Wang, the chairman of MIE Group, organizer of China Trade Week, said that 88 Chinese companies will showcase a range of products such as building materials, solar equipment, farm machinery, and new energy vehicles during the three-day event. Wang added that by hosting China Trade Week, Kenya has cemented its position as a strategic hub for the implementation of projects that align with China's Belt and Road Initiative. Fabrizo Koech, a female entrepreneur in the general merchandise business, was among the first to visit the Chinese exhibitors, seeking information on how to import hardware equipment for her buyers. "In this expo, my specific mission is to meet wholesale suppliers of hardware tools such as door locks, nuts and bolts, pipes and spanners," she said. Koech added that her clients are uncompromising on quality and have always been satisfied when she provides proof that the products she imports from China meet international standards. Running concurrently with the Africa Technology Show and the Women in Technology and Innovation Africa summit, this year's expo is expected to unlock new business opportunities, elevating Sino-Kenya economic ties to new levels, said Edwin Masivo, Kenya country director of Global Exhibitions Inc. Both Chinese and Kenyan exhibitors will be showcasing a wide range of products under one roof, including home appliances, electronics, fast-moving consumer goods, cosmetics, leather and apparel, Masivo said. He observed that one decade of hosting China Trade Week has been pivotal in facilitating investment, skills and technology transfer, job creation, and enhancing Sino-Kenya cultural ties. Abigael Okello, founder and executive director of Solar Mtaani, a social enterprise that promotes clean energy for rural communities, said that she attended the expo to learn about the latest technologies that off-grid communities can harness for cooking and lighting their homes. "Given that most of our products come from China, we would love to form partnerships and network with different companies from China to see how we can custom-make solar products that meet energy needs in the country," she added. Catherine Atieno, an ICT major from a local public university, said that during China Trade Week, she looked forward to meeting Chinese companies dealing in smart home appliances, mobile phones, or laptops. China is a leading source of smart devices that Kenyans are using to connect and conduct online transactions, Atieno said, adding that she hoped to gain new insights into China's advances in the digital economy during the trade week. China Trade Week has created a platform for connecting Kenyan start-ups to potential markets in China and other parts of the world, unlocking capital and growth, said Richard Muteti, chief executive officer of the Confederation of Micro and Small Enterprises Organization-East Africa. "This event brings together investors, suppliers, and buyers under one roof. It has acted as a catalyst for local value addition, skills development and the establishment of resilient supply chains," Muteti added.
The Star
4 hours ago
- The Star
Cambodian durian allowed to be exported to China
PHNOM PENH, July 8 (Xinhua) -- Fresh durian is Cambodia's fifth fresh fruit allowed to be exported to the Chinese market, Chinese Ambassador to Cambodia Wang Wenbin said on Tuesday. In a post on social media, Wang said recently, the General Administration of Customs of China (GACC) updated the list of registered orchards and packaging factories for Cambodian fruit exports to China. "The list has been newly added with the list of registered orchards and packaging factories for Cambodian fresh durian exported to China, indicating that Cambodian fresh durian has completed all export procedures to China and can be exported to China," he said. "This is the first high-quality Cambodian agricultural product approved for export to China in 2025, and it is another new achievement of China-Cambodia pragmatic cooperation," he added. Wang said that so far, Cambodia has five kinds of fruits available for export to China, and they are bananas, mangoes, longans, coconuts and durians.
New Straits Times
5 hours ago
- New Straits Times
NST Leader: Data centre surge
MALAYSIA, a small hydrocarbon producer by world standards, is eyeing the new oil of the 21st century: data centres. Glowing bromide hype on such centres match their power demand surge. On Monday, Hong Leong Investment Bank Bhd (HLIB Research) said in a thematic note to Business Times that Malaysia is no longer a spillover market from Singapore and that it is a go-to destination for hyperscalers. Johor is partly the reason for the hype. From 10 megawatts (MW) of data centres in 2021, the state grew to 1.3 gigawatts last year, according to media reports. Not so fast, we must say. They are not just guzzlers of water and energy, but gobblers of land, too. Sure, there is ample land, as HLIB Research reckons, but only for now. Even cost competitiveness is under threat with the recent Tenaga Nasional Bhd tariff hike. A Reuters report on July 1 quoted industry and government officials as saying that the new tariff hike would add 10 to 14 per cent to the electricity costs of data centres. According to Gary Goh of Sprint DC Consulting, a data centre advisory firm that the news agency quotes, for a 100 MW facility, that works out to be an additional US$15 to US$20 million per year, not including fuel surcharge. Fuel surcharge is announced by the government every month based on fuel prices and foreign exchange. Goh also said many in the industry were caught unprepared for the scale of increase and that some investors were already on the wait-and-see mode. Be that as it may, Reuters, pointing to a joint report issued in May by Bain & Co, Google and Singapore's state-owned Temasek, said Malaysia is set for the region's fastest surge in data centre power demand, tripling to 21 per cent by 2027 from seven per cent in 2022. Malaysia, committed as it is to tame climate change, is slowly but surely phasing out black gold due to its Earth-warming effect. But data centres aren't exactly problem-free. Think guzzlers and gobblers. According to one estimate, a 100 MW data centre consumes electricity equivalent to what 45,000 households use. A data centre with similar capacity is said to use water equivalent to a 10,000-person city in the calculation of Lawrence Berkeley National Laboratory, an American entity. Malaysia may have enough energy and water for now, but what about in the years to come? Many will argue that the data centres are paying a premium for access to energy and water, but both are drawn from the same sources. As more and more data centres come chasing cheap land and energy, electricity infrastructure and rivers will be stressed beyond their capacity. This is precisely why Singapore imposed a moratorium on data centres between 2019 and 2022. On Jan 5, then natural resources and environmental sustainability minister Nik Nazmi Nik Ahmad admitted in an interview with the Financial Times that data centres had put "a lot of pressure" on Malaysia's energy and water resources. For sure, data centres, especially the hyperscalers, bring in billions of investment dollars, but they come attached with a heavy price tag. Can we afford it? Only if the benefits outweigh the costs.
