With so many Chinese EV brands popping up everyday, how many can actually last?
Now it is no secret that there are many new Chinese electric vehicle (EV) brands being launched almost every day. Some of these brands are even showing up here in Malaysia. However, with declining EV sales in the West and with so many brands competing being put out of business by legacy brands, how many of them can actually stay profitable in 2025 and beyond? Let’s see.
“As the domestic market becomes saturated and overseas sales in developed economies are hampered by punitive tariffs, the key players will have to be very efficient in cost control and refrain from splashy spending to save powder for the tough business environment ahead.” said Chen Jinzhu, CEO of Shanghai Mingliang Auto Service, an industry consultancy.
Moreover, among the four unprofitable, publicly traded Chinese premium EV builders, Nio, partner to our first national carmaker Proton, Geely, Zeekr and Stellantis-backed Leapmotor, only Nio reported a wider net loss in the three months ending September, year on year. All of them have made plans to stem their losses.
By the way, Proton has also just unveiled its first ever EV, which, of course, is based on a Geely model, much like other newer Proton models. While the success (or failure) of a local EV through Proton remains to be seen, there is already a lot of backlash for its price even before anyone has seen it on the road so in general, it seems that EVs are not doing so well.
On top of that, the mismatch between capacity and demand is insane. By the end of 2023, EV assemblers in mainland China were capable of producing 17 million EVs annually, and the overall factory utilisation rate stood at 54 percent, according to Goldman Sachs. The US bank predicted that additional capacity of 3.2 million units would be added this year, less than the 5.2 million units of capacity added in 2023.
The China Association of Automobile Manufacturers forecast full-year deliveries of more than 11 million units in 2024, which would represent 54.5 percent of that total capacity of 20.2 million, nearly unchanged from a year earlier. While China has about 50 EV brands right now, only 8 are predicted to remain by 2027.
What’s more, only BYD, the number 1 EV brand, Li Auto and Aito have seen profits, while the ongoing price war in China is ensnaring most of their domestic competitors. Manufacturers hoping that international markets would help improve their bottom lines hit a speed bump this year after the US and the European Union decided to slap additional tariffs on Chinese EVs.
Did you know that the American government raised the tariff on Chinese-made EVs to 100 percent from 25 percent in August this year? This will only make things worse for newer and less established EV brands from China. So how many of these brands will see a profit from next year? Let’s wait and see.
