More Than Half of New Car Sales in China Are EVs, yet Only 2 Companies Are Profitable

In a report by SCMP, despite more than half of new car sales in China being EVs, the industry players are not hitting a profit due to on-going price wars.

According to CNN there are over 200 EV manufacturers in China and in the SCMP report only 2 have reported a profit, BYD and Li Auto.

The three EV manufacturers that have released second-quarter earnings so far – Xpeng, Zeekr Intelligent Technology and Leapmotor – reported a combined loss of 42.9 billion yuan (US$6 billion).

According to the China Passenger Car Association, 878,400 pure electric and plug-in hybrid vehicles were delivered to mainland customers last month, 36.9 per cent more than in the same period in 2023. They accounted for 51.1 per cent of total vehicles sold.

China accounts for more than 60 per cent of global EV sales.

Xpeng reported a net loss of 1.28 billion yuan for the second quarter, narrowing 6.6 per cent from a 1.37 billion yuan loss in the first quarter.

Revenue shot up 23.8 per cent quarter on quarter to 8.1 billion yuan.Zeekr, the premium EV maker controlled by Geely Auto, recorded a net loss of 1.81 billion yuan for the three months ending June despite record quarterly revenue of 20 billion yuan.

Most mainland EV makers, including Zeekr, have been offering discounts to attract more buyers in the mammoth market

This race to the bottom in prices does not bode well for drivers as where do we think these manufacturers will look to to save costs?

When profits are slim and the higher ups are asking you to make ever cheaper vehicles to eke out some money, do you think quality and reliability will be top of mind for these manufacturers?

Perhaps we’re at the cusp of seeing the EV bubble burst in China.