China’s EV bloodbath

The Chinese domestic new car landscape will look very different in five years’ time, as intense competition forces many smaller players into obsolescence.

According to a recent Reuters report, which cites market research from consultancy AlixPartners, just 15 out of 129 electric vehicle brands currently selling cars in China will survive until 2030.

In other words, 114 Chinese car brands are essentially walking dead.

The contraction of EV brands in China is not a new phenomenon, however.

Rewind to 2018 and there were 500+ electric vehicle startups in China – that number is now less than under 130.

After government subsidies and tax breaks were rolled back at the end of last decade in China, along with end of fast-tracked local production licenses around the same time (not to mention forced factory closures due to COVID-19), and the bankruptcies began to snowball.

“This environment has driven remarkable advances in technology and cost efficiency, but it has also left many companies struggling to achieve sustainable profitability,” Stephen Dyer, head of AlixPartners’ automotive practice in Asia, told Reuters.

Then BYD and Tesla triggered ruthless price wars and given many of the startup ventures did not have the scale, robust supply chains or vehicle platforms to match the big players, many EV makers bit the dust.

The casualties have already included the likes of HiPhi, WM Motor and Byton.

Some observers have suggested an abundance of subsidy-hunting speculative ventures in China with zero automotive DNA were created purely to grab state handouts.

For global automakers watching China’s EV experiment, the message is clear: this isn't disruption – it’s domestic competition.

The math is staggering – what was once more than 500 EV carmakers will be just 15 or so by 2030. And the survivors will control 75 per cent of China’s EV market by decade’s end.

This will likely have ramifications for the major Chinese players already embarking on significant export journeys but how it all plays out may also hinge on government-level decisions within China.

The carnage is already visible with many brands – including big names such as BYD – which are already reducing vehicle outputs and cutting shifts at their manufacturing plants.

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