BYD, China’s largest electric vehicle manufacturer, has warned of an impending crisis threatening the electric and hybrid vehicle market in the country, following the recent government crackdown on significant discounts that has ignited a fierce price war among companies.
The company’s CEO stated that the market could see nearly 100 companies exit in the near future, emphasizing that even having 20 companies remaining in this sector is considered a large number compared to the actual capacity of the market.
This warning comes at a time when Chinese President Xi Jinping has directly criticized the price wars stemming from excess production capacity. He confirmed that these practices not only harm companies but also exacerbate the deflationary pressures facing the Chinese economy, increasing the risks for the future of the industry.
Today, the Chinese market includes about 130 companies competing in the production of electric and hybrid vehicles. However, future projections indicate a wave of mergers and an exit of small to medium-sized companies. According to estimates by the consulting firm Alix Partners, only around 15 major players capable of competing will remain in the market by 2030.
In the same context, Xpeng, a competitor to BYD, forecasts that the global electric vehicle market will shrink to just 10 companies over the next decade, noting that fierce competition and rising production costs will lead to a fundamental restructuring of the sector.
Automakers in China face multiple pressures, most notably a slowdown in domestic demand and reduced government support, along with increasing global competition as American and European companies aggressively enter the market. While BYD believes that current crises may redraw the industrial landscape, it seeks to maintain its leading position by boosting investments in technology and expanding internationally.
