Latest news with #Evergrande
Indian Express
6 days ago
- Business
- Indian Express
Daily subject-wise quiz : Economy MCQs on Periodic Labour Force Survey, non-fossil fuel sources and more (Week 119)
UPSC Essentials brings to you its initiative of subject-wise quizzes. These quizzes are designed to help you revise some of the most important topics from the static part of the syllabus. Attempt today's subject quiz on Economy to check your progress. 🚨 Click Here to read the UPSC Essentials magazine for June 2025. Share your views and suggestions in the comment box or at Consider the following statements: Statement 1: When prices start to fall, consumers hold back purchases in the hope of buying the same good for cheaper later. Statement 2: This behaviour increases the prices further, and the gap decreases between supply and demand. Which one of the following is correct in respect of the above statements? (a) Both Statement 1 and Statement 2 are correct and Statement 2 is the correct explanation for Statement 1. (b) Both Statement 1 and Statement 2 are correct and Statement 2 is not the correct explanation for Statement 1. (c) Statement 1 is correct but Statement 2 is incorrect. (d) Statement 1 is incorrect but Statement 2 is correct. Explanation — With China's domestic consumer base still recovering from the economic shock of the Covid-19 disruption, the country's economy suffered a collapse of its thriving real estate market. The collapse of Evergrande, previously the world's most valuable real estate corporation, highlighted the magnitude and repercussions of the crisis. — Real estate was a major component of people's household assets; falling property values harmed consumer confidence, reduced general demand for products and services, and hampered China's internal development engines. — The Chinese economy has also been experiencing deflationary pressures, which refers to prices falling year after year. Deflation, the inverse of inflation, frequently causes major issues for an economy. As prices start to fall, consumers hold back purchases in the hope of buying the same good for cheaper later. This behaviour brings down prices further as the gap between supply and demand widens. Hence, statement 1 is correct and statement 2 is not correct. Therefore, option (c) is the correct answer. The objective of the Periodic Labour Force Survey (PLFS) is to estimate the: 1. Worker Population Ratio 2. Labour Force Participation Rate 3. Unemployment Rate Select the correct answer using the codes given below: (a) 1 and 2 only (b) 2 only (c) 2 and 3 only (d) 1, 2 and 3 Explanation — Seasonal factors impacted on India's labour market again in June, with the unemployment rate remaining steady at 5.6%. However, the Labour Force Participation Rate (LFPR) fell to 54.2% in June from 54.8% in May, indicating that fewer people looked for work last month. — According to the Statistics Ministry's most recent monthly Periodic Labour Force Survey (PLFS) report, released on Tuesday, while the unemployment rate (UR) for Indians aged 15 and up remained flat month on month in June at 5.6%, there was a marginal decline in UR for females to 5.6% from 5.8% in May, while males remained at 5.6 percent. — The primary purpose of PLFS is twofold: (i) To estimate the major employment and unemployment indicators (viz. Worker Population Ratio, Labour Force Participation Rate, Unemployment Rate) for urban regions exclusively in the 'Current Weekly Status' (CWS) during a three-month period. (ii) To estimate employment and unemployment indicators in both 'Usual Status' (ps+ss) and CWS in both rural and urban areas on a yearly basis. Therefore, option (d) is the correct answer. (Other Source: Consider the following statements: 1. As of June 2025, non-fossil fuel sources account for more than 50 per cent of the country's installed electricity capacity. 2. In 2024, India ranked first globally in renewable installed capacity. 3. Among non-fossil fuel sources, nuclear energy accounts for the maximum electricity production. How many of the statements given above are correct? (a) Only one (b) Only two (c) All three (d) None Explanation — India has achieved a significant climate milestone five years ahead of schedule: as of June 30, non-fossil fuel sources accounted for 50.1% of the country's installed power capacity. These sources, which include nuclear, large hydro, and renewables, accounted for just 30% of installed capacity in 2015 and 38% in 2020, before rapidly increasing over the last five years due to solar and wind power. Hence, statement 1 is correct. — When the Paris Agreement on Climate Change was signed in 2015, India pledged to achieve 40% non-fossil fuel capacity by 2030. This objective was boosted to 50% in 2022. — As of June, India's total installed capacity was 485 gigawatts (GW). Renewables, which include solar, wind, small hydro, and biogas, accounted for 185 GW, according to a news statement from the Ministry of New and Renewable Energy (MNRE). Large hydroelectric facilities supplied 49 GW, while nuclear energy added 9 GW, bringing the total non-fossil fuel capacity just over halfway. Thermal power, primarily coal and gas-based, accounted for the remaining 242 GW, or 49.9 percent. In 2015, thermal had a 70% share. Hence, statement 3 is not correct. — In 2024, India ranked fourth globally in renewable installed capacity, including large hydro, behind only China, the US, and Brazil. Hence, statement 2 is not correct. Therefore, option (a) is the correct answer. Consider the following pairs: 1. SAGAR-SETU – It is a mobile application which aims to improve the Ease of Doing Business. 2. Harit Sagar – It aims at achieving the Zero Carbon Emission Goal. 3. Sagar Mathan – It is a mission launched by the Ministry of Ports, Shipping and Waterways, Government of India, to increase fish production. How many of the pairs given above are correctly marked? (a) Only one pair (b) Only two pairs (c) All three pairs (d) None of the above pairs Explanation SAGAR SETU — The National Logistics Portal has created a smartphone app aimed at improving the ease of doing business. Hence, pair 1 is correct. — It enables real-time port operations and monitoring, as well as handled services for the port fraternity to access vessel, cargo, container, finance, and regulatory authority data and services, thereby improving the customer experience. Harit Sagar — To match the greater objective of achieving the Zero Carbon Emission Goal, the Ministry of Ports, Shipping, and Waterways has launched the 'Harit Sagar' Green Port Guidelines. Hence, pair 2 is correct. — The Harit Sagar Guidelines – 2023 envision ecosystem dynamics in port construction, operation, and maintenance, while adhering to the 'Working with Nature' principle and reducing the influence on biotic components of the harbour ecosystem. Sagar Manthan — The Union Minister for Ports, Shipping, and Waterways has inaugurated 'Sagar Manthan', a digital platform that contains detailed information about the Ministry and all of its organisations. The Real-time Performance Monitoring Dashboard makes it easier to track projects, key performance indicators, the Maritime India Vision 2030, and financial and operational aspects. Hence, pair 3 is not correct. Therefore, option (b) is the correct answer. Consider the following statements about Zero tillage: 1. It is the practice of growing crops without disturbing the soil strata. 2. It increases soil erosion and decreases the water retention capacity of soil. Which of the statements given above is/are correct? (a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2 Explanation — Zero tillage, often known as no-till farming, is the process of cultivating crops without disturbing soil strata using typical tillage methods. Hence, statement 1 is correct. — This strategy retains soil structure while increasing fertility, resulting in several environmental and economic benefits. — This method entails spreading seeds directly into the soil, generally using specialised equipment that digs furrows without turning the soil. — This approach dramatically minimises soil erosion while increasing soil's water retention capacity. Hence, statement 2 is not correct. Therefore, option (a) is the correct answer. Consider the following statements regarding PM Kisan Samman Nidhi Yojana: 1. It is a centrally sponsored scheme which aims to address the financial needs of farmers for agricultural inputs and household expenses. 2. Under the scheme an income support in three equal installments will be provided only to all small and marginal land holding farmer families. Which of the above statements is/are correct? (a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2 Explanation — PM-Kisan is a Central Sector Scheme fully funded by the Government of India. Hence, statement 1 is not correct. — Under this scheme, an income support of ₹6,000 per year is provided to all landholding farmer families. Hence, statement 2 is not correct. Therefore, option (d) is the correct answer. Consider the following statements regarding HTBt cotton: 1. It is officially approved for commercial cultivation in India. 2. The HT trait allows the cotton plant to withstand the application of glyphosate, a commonly used herbicide. 3. It is developed by Indian public sector research institutes. How many of the statements given above are not correct? (a) Only one (b) Only two (c) All three (d) None Explanation — HTBt cotton is not approved in India; it is developed by private players and illegally circulated. Hence, statements 1 and 3 are not correct. — Central government regulations stipulate fines as well as jail terms for the cultivation of non-authorised GM crops. India has so far allowed the commercial release of Bt cotton. Bt stands for Bacillus thuringiensis – the name of the bacteria whose gene has been inserted into the cotton seed. — HTBt is the next generation of GM cotton and allows the plants to resist the spray of the commonly applied herbicide glyphosate for weed control. But the sale, production as well as storage of this variant is illegal in the country. Hence, statement 2 is correct. Therefore, option (a) is the correct answer. Under the GST (Goods and Services Tax) regime, the 12% slab includes which of the following categories? 1. Packaged food items such as condensed milk, nuts, dates, sausages, fruit juices 2. Household goods such as cotton, jute handbags, furniture, sewing machines, some textile products 3. Medical items such as medical grade oxygen, gauze, bandages, diagnostic kits. 4. Luxury products and services, tobacco products Select the correct code: (a) 1, 2 and 3 only (b) 1, 3 and 4 only (c) 1, 2 and 4 only (d) 1, 2, 3 and 4 Explanation — These items fall under the 12% rate slab; luxury products and services, tobacco products fall under 28 per cent. Therefore, option (a) is the correct answer. Daily Subject-wise quiz — History, Culture, and Social Issues (Week 117) Daily subject-wise quiz — Polity and Governance (Week 119) Daily subject-wise quiz — Science and Technology (Week 119) Daily subject-wise quiz — Economy (Week 118) Daily subject-wise quiz — Environment and Geography (Week 118) Daily subject-wise quiz – International Relations (Week 118) Subscribe to our UPSC newsletter and stay updated with the news cues from the past week. Stay updated with the latest UPSC articles by joining our Telegram channel – IndianExpress UPSC Hub, and follow us on Instagram and X. Manas Srivastava is currently working as Senior Copy Editor with The Indian Express (digital) and leads a unique initiative of IE - UPSC Essentials. He majorly writes on UPSC, other competitive exams and education-related projects. In the past, Manas has represented India at the G-20 Youth Summit in Mexico. He is a former member of the Youth Council, GOI. A two-time topper/gold medallist in History (both in graduation and post-graduation) from Delhi University, he has mentored and taught UPSC aspirants for more than five years. His diverse role in The Indian Express consists of writing, editing, anchoring/ hosting, interviewing experts, and curating and simplifying news for the benefit of students. He hosts the YouTube talk show called 'Art and Culture with Devdutt Pattanaik' and a LIVE series on Instagram and YouTube called 'LIVE with Manas'.His talks on 'How to read a newspaper' focus on newspaper reading as an essential habit for students. His articles and videos aim at finding solutions to the general queries of students and hence he believes in being students' editor, preparing them not just for any exam but helping them to become informed citizens. This is where he makes his teaching profession meet journalism. He is also the editor of UPSC Essentials' monthly magazine for the aspirants. He is a recipient of the Dip Chand Memorial Award, the Lala Ram Mohan Prize and Prof. Papiya Ghosh Memorial Prize for academic excellence. He was also awarded the University's Post-Graduate Scholarship for pursuing M.A. in History where he chose to specialise in Ancient India due to his keen interest in Archaeology. He has also successfully completed a Certificate course on Women's Studies by the Women's Studies Development Centre, DU. As a part of N.S.S in the past, Manas has worked with national and international organisations and has shown keen interest and active participation in Social Service. He has led and been a part of projects involving areas such as gender sensitisation, persons with disability, helping slum dwellers, environment, adopting our heritage programme. He has also presented a case study on 'Psychological stress among students' at ICSQCC- Sri Lanka. As a compere for seminars and other events he likes to keep his orating hobby alive. His interests also lie in International Relations, Governance, Social issues, Essays and poetry. ... Read More
Indian Express
7 days ago
- Business
- Indian Express
Explained: China's GDP growth data
China's GDP grew 5.2% in the second quarter (April-June) of 2025, according to official figures released on Tuesday. This means that despite the high tariffs imposed by United States President Donald Trump, the value of the economic output (that is, all goods and services) inside China during the second quarter of 2025 was 5.2% more than the economic output during the same quarter of 2024 (Chart 1). This is the second consecutive quarter in which China's GDP growth has beaten the expectations of global analysts. In the first quarter (January-March), the Chinese economy grew even faster, at 5.4% on an annualised basis. Market estimates had pegged its second-quarter GDP growth at about 4.5%. At this rate, China looks set to achieve its annual growth target of 'around 5%'. However, most analysts outside the country still expect China's growth to slow down in the second half of the year. For three decades, China's economy grew at an explosive pace on the back of a historic manufacturing boom that allowed it to capture an ever increasing share of global exports. Within the country, there was a massive expansion of physical infrastructure. This dependence on exports (on the external front) and real estate (on the domestic front) created structural imbalances. Over the past several years, many countries have turned away from globalisation and global trade, even as their economies have slowed. As the share of exports in China's GDP has fallen, its growth has been affected. That said, even now exports contribute around 20% of the Chinese GDP. With China's domestic consumer base still struggling to recover from the economic shock of the Covid-19 disruption, the country's economy was hit by a collapse of its booming real estate market. The downfall of Evergrande, once the world's most valuable real estate company, underlined the scale and consequences of the crisis. Real estate figured prominently among people's household assets — the crashing prices of property hit consumer confidence further, dampened the overall demand for goods and services, and slowed down China's domestic engines of growth. A direct fallout was an increase in unemployment. Youth unemployment (ages 16 to 24) rose to more than 20% — one in five — by the middle of 2023, the last time that the government released these data. The Chinese economy has also been facing deflationary pressures (Chart 2), which refers to prices going down year on year. Deflation, the opposite of inflation, often presents serious problems for an economy. As prices start to fall, consumers hold back purchases in the hope of buying the same good for cheaper later. This behaviour brings down prices further as the gap between supply and demand widens. A deflationary spiral means there is no incentive for businesses to invest or produce goods, and this results in the economy stagnating. Resolving deflation can be more difficult than containing high inflation because there is only so much that policymakers can do in terms of cutting interest rates and increasing government spending to boost economic activity. The supply chain disruption caused by the pandemic spotlighted the dangers of high dependence on China and led to efforts by countries to diversify by adopting a China+1 strategy. In the US, the Biden administration continued with the tariffs imposed by the first Trump administration and took other policy initiatives (such as the CHIPS Act) to boost the American semiconductor industry and contain China's advance in critical new technology areas. Indeed, in the years after the pandemic, the world's largest economy has increased the lead over its nearest competitor. In 2021, China's economy was around 75% the size of the US economy; in 2024, China's GDP was only 64% of the US's. Between 2021 and 2024, the US economy grew from an annual nominal GDP of $23.6 trillion to $29.1 trillion, China's annual GDP during this same period increased by less — from $17.8 trillion to $18.2 trillion. Many had expected Trump's tariff war would significantly affect the Chinese economy. But the data since the start of 2025 have been counterintuitive. While the US economy shrank in the first quarter and there are persistent worries about a recession, China has maintained a steady growth momentum. China's GDP growth rate has moderated from the first quarter, but underlying data show manufacturing growth has remained resilient, and industrial production continues to beat forecasts. Chinese exports too have continued to grow. Even though exports to the US have reportedly fallen 26%, the gap has been more than filled by a rise in exports to other destinations such as the ASEAN countries, Africa, and the European Union. There is one other, fundamental question: can data from China's National Bureau of Statistics be trusted? China's national accounts have never enjoyed credibility of the kind that Western economies with a free press and transparent reporting standards have had. Thus, every time China's data beats expectations, questions are raised on its credibility. But doubts over China's GDP data are gradually receding. Research by Barcelona et al (Chart 3) published on June 6 on the US Federal Reserve website, concludes: '…Assessing the accuracy of China's GDP growth remains a challenge and no statistical model can provide a definitive alternative measure. But our analysis suggests that official figures have not recently been overstating GDP growth…'
Japan Forward
10-07-2025
- Automotive
- Japan Forward
Is BYD, China's Flagship EV Maker, the Next Evergrande?
Since Chinese leader Xi Jinping classified electric vehicles as a pillar of China's "new quality productive forces" and a key sector in which China could surpass the rest of the world, the country's EV industry has enjoyed aggressive state support. Leading the charge is BYD, the dominant force in China's electric car sector, which has expanded globally with remarkable speed. For a time, it seemed nothing could stop BYD's meteoric rise. However, since the end of May, rumors have surfaced online that BYD might be the next major Chinese corporate implosion — China's automotive equivalent of Evergrande. Is this just online speculation, or is there truth behind it? One Chinese economist analyzed BYD's financials and reached a shocking conclusion: since 2022, BYD has operated under a zero-profit strategy, a business model that is inherently unsustainable. If BYD's annual sales growth falls below 16%, the company could collapse overnight — and potentially drag the entire EV industry down with it. Let's examine how this conclusion was reached. Before delving into financial figures, one must first consider a widely criticized aspect of BYD's operations: its unusually long supplier payment terms. While international automakers typically pay suppliers within 45 to 60 days — Tesla, on the longer end, within 90 days — BYD's average payment period in 2023 stretched to a staggering 275 days. How many suppliers can withstand or are willing to tolerate such a delay? This practice, which effectively suppresses BYD's debt ratio by exploiting suppliers, raises serious questions about how sustainable its business model really is. To understand the full picture, we must also uncover the secrets hidden in BYD's financial statements. According to BYD's 2024 financial report, the company posted a net profit after tax of 41.6 billion yuan ($5.82 billion USD) — a remarkable 32.9% increase year over year. Its total revenue reached 777.1 billion yuan ($108.37 billion), resulting in a net profit margin of 5.4%. For an industrial enterprise in China, this is already an outstanding result. Most Chinese industrial firms operate with net margins of only around 2%, making BYD appear far ahead of the pack. But a puzzling contradiction emerges: if BYD's profits are so strong, why does it stretch supplier payments so aggressively? Typically, high profits and delayed payments are mutually exclusive. In general business logic, prolonged payables suggest liquidity constraints or operating losses, not robust profits. So why is BYD breaking this logic? A drone view shows BYD electric vehicles (EV) before being loaded onto the "BYD Explorer No1" for export. (©China Daily via Reuters) As an automaker, BYD's core profits come from vehicle sales. In 2024, BYD reported total revenue of 777.1 billion yuan ($108.37 billion), of which 533.3 billion yuan ($74.66 billion) — or 68.2% — came from vehicle sales. Other income sources include automotive parts and smartphone components. The company sold 4.27 million vehicles during the year. Dividing vehicle revenue by units sold gives us a per-unit sales revenue of 124,900 yuan ($17,486). What about the cost of producing each car? Although BYD doesn't explicitly state this, it can be estimated. In 2024, revenue from vehicles and auto parts totaled 617.4 billion yuan($86.44 billion). Of this, vehicle sales made up 86.4%. The total operating cost for vehicles and parts was 479.7 billion yuan ($67.16 billion). Assuming production efficiencies are consistent across both areas, we multiply 479.7 billion by 86.4%, resulting in an estimated vehicle production cost of 414.4 billion yuan ($58.02 billion). Divide that by 4.27 million units, and we get a per-unit pre-tax production cost of 97,000 yuan ($13,580). In 2024, BYD's total tax paid amounted to 52.7 billion yuan ($7.38 billion). Assuming the same 68.2% allocation applies to the auto business, tax attributed to vehicle sales would be about 35.9 billion yuan ($5.03 billion). Dividing that by 4.27 million vehicles, we get an average tax burden of 8,400 yuan ($1,176) per vehicle. Adding this to the production cost, the full per-vehicle cost — including tax — is 105,400 yuan ($14,756). So, comparing that to the per-vehicle revenue of 124,900 yuan ($17,486), BYD appears to enjoy a per-car profit of 19,500 yuan ($2,730) — a healthy 15.6% profit margin. But if the profit margin is indeed that high, why the need to delay payments to suppliers for nearly 9 months? To answer that, we must examine BYD's operating capital, defined as current assets minus current liabilities. This number indicates whether a company has the liquidity to meet its short-term obligations. Typically, operating capital fluctuates within a modest range. A positive value signals healthy debt repayment capacity, while a negative one suggests financial stress. Up until 2021, BYD's operating capital hovered around ±5 billion yuan ($700 million), with most years in the red. That's not alarming, just indicative of tight cash flow. But starting in 2022, a dramatic shift occurred: BYD's operating capital plunged to -92.5 billion yuan ($12.95 billion) —a figure far beyond historical norms and indicative of severe liquidity strain. In theory, such a massive negative value suggests that the company is hiding costs within its current liabilities while still declaring large profits. And indeed, BYD claimed 17.7 billion yuan ($2.48 billion) in profits for 2022, up 3.4 times from the previous year, despite a worsening liquidity position. In 2022, BYD became the undisputed leader in China's EV market, selling 1.87 million vehicles and claiming 27.1% market share. But the anomaly in its operating capital points to a deeper issue. If an enterprise's operating capital shows a sharp negative turn while profits allegedly surge, it often means the company is using accounting tricks — such as delaying supplier payments or using commercial paper — to hide real costs under liabilities. Between 2022 and 2024, BYD's distorted operating capital figures essentially represent hidden production costs. To uncover the real cost per vehicle, we must reallocate these hidden costs. In 2024, the negative capital position stood at 125.4 billion yuan ($17.56 billion). Applying the 68.2% vehicle revenue ratio, 85.5 billion yuan ($11.97 billion) can be attributed to car production. Divided by 4.27 million units, this adds 20,000 yuan ($2,800) per car in hidden costs. Therefore, the true cost of producing each vehicle is not 105,400 yuan ($14,756), but 125,400 yuan ($17,556). Here lies the bombshell: BYD's per-unit revenue is 124,900 yuan ($17,486), while its real cost per vehicle — after hidden costs — totals 125,400 yuan ($17,556). The difference is just 500 yuan ($69.73), or 0.4%, a margin of error small enough to be statistically insignificant. This can only mean one thing: since 2022, BYD has been operating under a zero-profit model. Its competitive advantage in battery manufacturing gives it slightly lower production costs than rivals. By eliminating profits, it forces competitors to operate at a loss, squeezing them out of the market. This explains the ongoing "price war" in China's EV sector — and why the entire industry appears unprofitable. BYD's zero-profit strategy is the hidden force behind the chaos. Zero-profit sales are risky and often sit on the edge of antitrust or unfair competition laws. To maintain this strategy, BYD must conceal the truth by inflating current liabilities, giving the illusion of profitability. But this comes at a cost. The model only works if BYD can continuously expand revenue to cover essential expenses like depreciation and R&D. In 2024, BYD's fixed assets totaled 262.3 billion yuan ($36.72 billion). Assuming an average depreciation period of seven years, annual depreciation equals 33.2 billion yuan ($4.65 billion). On top of that, R&D expenses reached 54.2 billion yuan ($7.59 billion). This means to sustain operations, BYD's revenue must grow by at least 87.4 billion yuan (33.2 billion yuan+54.2 billion yuan, or $12.24 billion in USD) in 2025. That amounts to a 16.4% year-over-year increase. This is BYD's red line. Fall below this growth rate, and the company's fragile model begins to unravel. In May 2025, BYD sold 382,500 vehicles — up 15.3% from 331,800 a year earlier. This falls below the critical 16.4% threshold. If this trend continues for another two months, BYD could face systemic failure. That's the ultimate price of zero-profit operations. And BYD won't fall alone. It could drag down its entire supply chain — from battery makers to component suppliers and rival EV brands. When that happens, will the Chinese government really have the resources — or the political will — to rescue a company that has spent years distorting market competition? Maybe we cannot rule it out. But just as the Chinese Communist Party(CCP) failed to save Evergrande or stabilize the real estate market, I don't believe it has the capacity to bail out the EV industry either. In many ways, both Evergrande and BYD are classic examples of CCP-style companies. They expanded recklessly and used unethical tactics to squeeze out competitors. But can this model really last forever? I believe Evergrande has already given us the answer. Author: Jennifer Zeng Find Jennifer Zeng's articles on JAPAN Forward . Follow her on X (formerly Twitter) and on her blog page, Jennifer's World .
Time of India
04-07-2025
- Automotive
- Time of India
China targets involution' in EV market; crackdown on oversupply and price wars led by BYD
China targets involution' in EV market (Image credits: AP) China's government is stepping in to cool down the fierce price war in its electric vehicle (EV) market, as concerns over oversupply, shrinking margins, and industry instability grow. After years of aggressive industrial policy driving EV adoption, China's electric vehicle market has become the largest in the world. But it now hosts more automakers than the market can sustain, prompting fears of a bubble and unprofitable competition, reported AP. Market leader BYD reported strong sales growth, a 31% jump in the first half of the year to 2.1 million vehicles, but the company's aggressive pricing strategy has drawn criticism. Nearly half of those sales were pure electric vehicles, with the rest being plug-in hybrids. BYD stopped selling internal combustion engine cars in 2022. On May 23, BYD slashed prices across more than 20 models, setting off a fresh round of EV price cuts in China. That same day, Great Wall Motors Chairman Wei Jianjun warned of unhealthy market dynamics, comparing the situation to the downfall of real estate giant Evergrande. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like 5 Books Warren Buffett Wants You to Read In 2025 Blinkist: Warren Buffett's Reading List Undo . 'The Evergrande in the automobile industry already exists, but it is just yet to explode,' he said. BYD quickly responded, rejecting the comparison. Brand executive Li Yunfei defended the company in a strongly worded social media post, calling the remarks 'confusing' and 'ridiculous.' China moves to stop 'involution' Following the dispute, China's Ministry of Industry and Information Technology vowed to address what it called 'involution' competition, referring to destructive, zero-sum market behavior. Meanwhile, the China Association of Automobile Manufacturers urged fair competition, noting that drastic price cuts had sparked panic across the industry. 'That price cut might have been the final straw that irked both competitors and regulators for the ruthlessness that BYD continues to show,' said independent analyst Lei Xing. In June, 17 Chinese automakers, including BYD, pledged to pay suppliers within 60 days, marking a significant shift. Many EV companies have been stretching out payments or issuing IOUs to suppliers — a risky practice that mirrors tactics used by developers like Evergrande before the real estate crash. Will EV demand hold as prices stabilise? Analysts say these government efforts, along with cutbacks on financing deals and warnings against predatory pricing, are meant to stabilize the market and support long-term growth. With overseas sales rising, BYD exported 464,000 vehicles in the first half of 2025, and global tariffs increasing, China's EV industry faces a turning point at home and abroad. Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
Time of India
04-07-2025
- Automotive
- Time of India
China shows signs of tackling price wars taking toll on its EV industry
The Chinese government is signalling enough is enough when it comes to the fierce competition in the country's electric car market. China's industrial policy has engineered a remarkable transformation to electric vehicles in what is the world's largest auto market. In so doing, it has spawned far more makers than can possibly survive. Now, long-simmering concerns about oversupply and debilitating price wars are coming to the fore, even as the headline sales numbers soar to new heights. Market-leader BYD announced this week that its sales grew 31% in the first six months of the year to 2.1 million cars. Nearly half of those were pure electric vehicles and the rest were plug-in hybrids, it said in a Hong Kong Stock Exchange filing. The company phased out internal combustion engine cars in 2022. BYD came under thinly veiled criticism in late May when it launched a new round of price cuts, and several competitors followed suit. The chairman of Great Wall Motors warned the industry could come under threat if it continues on the same trajectory. "When volumes get bigger, it's just much harder to manage and you become the bullseye," said Lei Xing, an independent analyst who follows the industry. The government is trying to rein in what is called "involution" - a term initially applied to the rat race for young people in China and now to companies and industries engaged in meaningless competition that leads nowhere. BYD has come under criticism for using its dominant position in ways that some consider unfair, sparking price wars that have caused losses across the industry, said Murthy Grandhi, an India-based financial risk analyst at GlobalData. With the price war in its fourth year, Chinese automakers are looking abroad for profits. BYD's overseas sales more than doubled to 464,000 units in the first half of this year. Worried governments in the US and EU have imposed tariffs on made-in-China electric vehicles, saying that subsidies have given them an unfair advantage. Market leader BYD comes under attack The latest bout of handwringing started when BYD cut the price of more than 20 models on May 23. The same day, the chairman of Great Wall Motors, Wei Jianjun, said he was pessimistic about what he called the "healthy development" of the EV market. He drew a comparison to Evergrande, the Chinese real estate giant whose collapse sent the entire industry into a downturn from which it has yet to recover. "The Evergrande in the automobile industry already exists, but it is just yet to explode," he said in a video message posted on social media. Two days later, a BYD executive rejected any comparison to Evergrande and posted data-filled charts to buttress his case. "To be honest, I am confused and angry and it's ridiculous!" Li Yunfei, BYD's general manager of brand and public relations, wrote on social media. "All these come from the shocking remarks made by Chairman Wei of Great Wall Motors." Next, the government and an industry association weighed in. The China Association of Automobile Manufacturers called for fair competition and healthy development of the industry, noting that major price cuts by one automaker had triggered a new price war panic. On the same day, the Ministry of Industry and Information Technology vowed to tackle involution-style competition in the auto industry, saying that recent disorderly price wars posed a treat to the healthy and sustainable development of the sector. "That price cut might have been the final straw that irked both competitors and regulators for the ruthlessness that BYD continues to show," Lei said. A promise to pay suppliers within 60 days signals possible shift The following month, 17 automakers including BYD made a pledge: They would pay their suppliers within 60 days. One way China's automakers have been surviving the bruising price wars is by delaying the payments for months. The agreement, if adhered to, would reduce financial pressure on suppliers and could rein in some of the fierce competition. "The introduction of the 60-day payment pledge is the call of the government to oppose involution-style competition," said Cui Dongshu, the secretary-general of the China Passenger Car Association. It also reduces the risk of an Evergrande-like scenario. Many automakers had stretched out payments by paying suppliers with short-term debt - promises to repay them in a certain period of time - instead of cash. Real estate developers used the same system. It worked until it didn't. When Evergrande defaulted on its debts, suppliers were left holding worthless promises to pay. "This practice is seen as a potential cause of a larger crisis, similar to what happened with Evergrande," Grandhi said. The vows to speed up payments and the government calls to rein in the price wars, along with a rollback of some financing offers, point to an effort to reverse downward price expectations, said Jing Yang, a director at Fitch Ratings who focuses on the auto industry. "We may watch how effectively these measures are in reversing the price trend and how would that affect EV demand in the coming quarters," she said.
