The never-ending price war and chronic factory overcapacity in China will rear its ugly head as less than 10 percent of all domestic New Energy Vehicle (NEV) brands there will survive by 2030. This comes from a report by Reuters.
Citing a study done by AlixPartners, a global consultancy firm, only 15 out of the 129 EV and PHEV brands in China will survive in five years’ time. Without citing brand names, the 15 are projected to account for around 75 to 76 percent of China’s EV and PHEV market by 2030—each averaging annual sales of 1.02 million units.
Intense competition will force consolidation and some to exit the market, altogether says AlixPartners.
Unfortunately, consolidation in China is expected to proceed more slowly than in other markets, because local governments may continue supporting non-viable brands due to their importance to regional economies, employment, and supply chains.
“China is one of the most competitive NEV (new energy vehicle) markets in the world, with intense price wars, rapid innovation, and new entrants constantly raising the bar,” said Stephen Dyer, Greater China co-leader and head of Asia automotive practice at AlixPartners. “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.
China was the world’s largest automotive market in 2024, with EV sales accounting for more than 60 percent of the global total, according to the China Passenger Car Association.
China, the world’s largest automotive market, is facing a price war and significant overcapacity, both of which are straining profitability. Aside from BYD, Li Auto, and Aito, no other publicly listed Chinese EV makers have achieved full-year profitability.
Chinese regulators have called for automakers to halt the price wars. However, Dyer said that the war would likely continue, but through “hidden” factors such as insurance subsidies and zero interest financing rather than direct price cuts, he estimated.
The capacity utilization ratio at Chinese car plants has fallen to an average 50 percent last year, the lowest in a decade, further pressuring profits, Dyer said.
Buying a Chinese car is like rolling the dice. Not saying it is bad but there is uncertainty. I would rather buy an uncertain Nissan than a Chinese brand
ReplyDeleteLahatin ba lahat Ng Chinese Brand that will make u a R....
DeleteIf you think it's better to have a Nissan than BYD or Xiaomi, good luck sa uncertainty.
If you don't do your research then buying ANY car is like rolling dice (some with better odds than others). Besides, people taking the leap now even with the uncertainty helps build brand knowledge and creates less uncertainty in the future (the good and the bad). If you can't/won't take the risk now that's fair. Revisit them in 3-5 years time if you care to.
DeleteAnyone with half a brain knows this. Kaya nga nagtataka ako bakit ang dami pa rin bumibili ng Chinese cars sa atin, I guess they're just really newbies when it comes to cars. Yan target ng chinese manufacturers, yung wala masyadong alam sa sasakyan at madaling masilaw sa fancy tech.
ReplyDeletetech that will cost a lot pag nasira.....
DeleteYou overestimate the understanding an average person knows about the goings-on of business, especially in a foreign market.
DeleteI will argue against your point of calling these buyers 'newbies' though. The companies most likely to survive (although not named in the study) are still the companies that are doing the most business in the Philippines (a lot of newer brands coming in are also their sub-brands so that relationship lends them SOME credibility). The ever persistent claim of fancy tech blinding the new and uninformed buyers does not match with the general expectations of current market (or at least the global market). Almost every car reviewer (You-tuber or print journalist) in basically all of the markets (US, European, etc.) have standards calling for better tech (you call it fancy, they call it price-appropriate for what companies are charging). Amongst these journalists are people who have been covering cars for decades and don't think the new fancy tech is a phase that will just go away after a while (though there are degrees of change - like how many physical buttons, if any?). A lot of what is standard tech now used to be looked-down upon in a similar/uncertain fashion a decade or two ago and now lends brands additional appeal (think of any [insert japanese car brand here] [catchy name™ -patented technology!]). Besides, it's not JUST tech, it's the overall quality of the cars (look at what the top of the line cars japanese car companies sell in other markets vs the what the TOTL are like here in the Philippines) for the same price (or lower). And this is where some people will likely say "reliability IS quality!". Let's have that talk in 3-5 years (or less if problems do come out) and then we'll see if who was right to have doubts or to have faith by taking risks. Respectfully. :)
Narinig ko na yan, balik 3 to 5 years, yan sabi ng mga tao sa Geely. Look at them now, a simple search in google "Geely issues Philippines" would reveal a lot. Never trust chinese car companies.
DeleteI did your suggestion for the Google search and the vast majority of the results are from 2023 up to mid 2024 (when Geely started their takeover of PH operations). The latest result (and only one for 2025) I got from the search was one fb post from January 4 this year talking about their problems that started mid 2024. There were people replying to them that Geely said that by mid January their parts distribution would greatly improve. I tried looking at fb more and parang dealer/branch specific ang issues nang na basa ko. After that date, wala na results from news or major car websites. I would also recommend people taking a 'good look' at them now and not just take comments from strangers on the internet like us as gospel. If you personally lost trust with them that's fair (if it's based on personal experience) but you have to frame your arguments in good faith if you want to start/have an honest discussion. :)
DeleteNapansin ko yung ibang geely owners pinagtatakpan yung geely o tahimik pag may issue sasakyan nila. Bakit? My guess, its part of post purchase rationalization. Umiiwas din na masabihan ng "I told you so" 🤣🤣🤣
DeleteWhether there are owners that feel that way doesn't take away from the fact that things seemed to have overall quieted down for Geely, which I guess is a "no news is good news" thing. But I think pinoys in general are naturally very quick to complain and people in general are not prone to think that mistakes are their fault (even if they are) so the fact medyo tahimik na is pointing towards one thing over the other.
DeleteMaybe they gave up and got tired of complaining. Anyway, it's out there. Know what you're getting, learn from others' mistakes. 😜
DeleteNissan, Mahindra, Ford, GM, tesla, Suzuki, Audi, Volvo will be eliminated first.
ReplyDeletesobrang saturated na sa China, that's its basically overflowing
ReplyDeleteLike all Chinese EV companies, BYD has greatly benefitted from extensive Chinese government subsidies over the past few decades. BYD's domestic production capacity in China has reached 5.82 million vehicles annually as of 2024 and is the most aggressive in pricing to overwhelm the competition by offering deep price cuts in China's cutthroat auto market and sell its excessive inventory. However it fails to pay its suppliers on time as it takes 270 days or more to settle its obligations and is noted for its unfair labor practices. More than twenty Shandong Qiancheng Holdings Co. BYD dealerships across the province have abruptly closed or suspended operations leaving showrooms empty and customers without service. With its overcapacity, unsustainable business practices and thinning margins, even EV leaders such as BYD has no guarantees that it will be around in 2030, just like Evergrande of the real estate industry. Worse, it can quickly turn obsolete with the advent of solid state batteries of Toyota and Tesla that charges in 5 minutes with equal or longer ranges. ICE or hybrids are still the best options for now unless you have money to burn.
ReplyDeleteIt will really depend on China's government if they will bail out BYD... if not, then it may not be here in 2030. Too big to fail??
DeleteThis is like a collection of all the different complaints about BYD that each have their own answer. The 200+ days to pay is not 'failing to pay' since it was previously the maximum allowable payment window (this has been shortened and BYD is following the new regulations - they are a business after all). The dealership issues are the result of bad dealership practices and not BYD's responsibility (sometimes companies don't have a choice with dealership partners since they - the dealerships - may have a regional monopoly - I've mentioned before Hyundai has this problem in the US where their regional partner dealer's bad reputation also affects Hyundai's reputation in that area). Overcapacity? A previous article here on carguide cites chinese government claims that chinese car manufacturing is operating at like 49% capacity (oversupply yes but oversupply with the whole market not just BYD). Unsustainable business practices and margins - with the current price war you could argue this but they ARE the biggest player with the biggest 'war chest' (given their market share) to weather through. The usual winners of price wars and undercutting like this are the big players (look at the history of Walmart doing this to small stores in the states). Finally, I'd personally LOVE solid state batteries to make it to market but I follow a lot of niche future tech and stuff like that is WAY into the future (and Toyota has not been a believer in EVs, if they are researching it they probably aren't spending a lot in R&D and with Tesla - who knows?! with the kind of history of promises and missed targets being made by them, I doubt it). Given all of these points (and even with the study this article is referencing), do you really think BYD WON'T be one of the brands that survives by 2030? Really think about that...
Deleteits a dogs eat dogs thing, ganyan talaga Matira matibay, survival of the fittest, the winners take it all.
ReplyDeleteChinese companies are way ahead of the NEV game that its close to impossible for existing legacy companies to catch up. Ford CEO recently admitted it on record. Toyota tried hydrogen technology and failed miserably leaving its president into taking a lot of heat from the board. NEVs are expected to reach 25% of total sales this year and surpass 50% by 2030. By then AI and Tech is the name of the game coupled with a new engine technology which most likely be electric motors and batteries. As in the bible "new wine new skin". ICE has been with us for 140 years. Its due for a change by the turn of the new decade.
ReplyDeleteChinese automakers are surviving because they are heavily subsidized by the Chinese government. That’s just it. Without government subsidies, it’s a totally different story.
ReplyDelete