A ‘race to the death’ has begun that will completely transform the world’s largest electric car market

A “life and death race” has broken out in the world’s largest electric car market, writes CNN. The next few months will be crucial for China’s manufacturers, and many of them will “never reach the finish line”.

China’s electric car manufacturers have enjoyed generous support from the Beijing government for many years, with some of them quickly becoming global players. BYD, for example, is now fighting with Tesla for the top spot in the electric car market.

But the more than 200 manufacturers in China are now facing big problems because of the huge surplus. It doesn’t help that enthusiasm for electric cars has waned in other markets around the world.

“Not all of today’s players will make it to the finish line,” explained Mark Rainford, an auto industry analyst based in Shanghai.

Even Chinese officials have admitted that electric car manufacturers will face a very tough time in the coming months. Competition in the automobile industry with engines using new types of energy will be “extremely fierce in 2024”.

More than a dozen car makers disappeared from the market last year, according to statistics from Chinese authorities. Among them are brands that were once popular, such as WM Motor, Byton, Aiways and Levdeo.

Other global manufacturers have had to restructure their operations or close altogether. In October, Mitsubishi Motors announced it would halt car production in China, and Honda, Hyundai and Ford have taken similar steps to cut costs.

By 2030, the world’s second largest economy could be left with less than 5 major players in the electric car market.

The price war began in 2022, when Tesla cut the prices of the Model 3 and Model Y in China by up to 9%. Three months later, he slashed them again, triggering a wave of price cuts that swept across the country’s auto industry in 2023, including gasoline carmakers.

Tesla announced this week that it will again cut the prices of four models sold in China, its largest overseas market, by 14,000 yuan to $1,932.

Xpeng and Li Auto, China’s fastest-growing brands, also immediately offered generous discounts or subsidies of tens of millions of dollars to attract buyers.

The deals available to Chinese shoppers are now very attractive, but some brands will not be able to continue operating at such deep discounts indefinitely.

Another problem is that the Chinese market is crowded with new models of electric cars. “The market will remain in a state of surplus for a long time,” the Chinese authorities announced.

A “brutal knockout round” is ahead, BYD chairman Wang Chuanfu also predicted. As the industry consolidates, more and more small and medium-sized companies will be pushed out of the market.

Chery Auto chairman Yin Tongyue said electric car makers are now entering a “life and death race”. His company will introduce 39 new pure electric and hybrid models in 2024 and 2025 to achieve the first position in the market.

But for those who survive, the future is not all bleak. In 2024, the market share of electric cars could reach up to 45% in China.

Editor: Raul Nețoiu

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