China is the world’s largest electric vehicle (EV) market, and it is truly a different world there, with a new EV brand popping up in what feels like every couple of minutes. But according to consultancy firm AlixPartners, only 15 out of the 129 current EV and hybrid brands in China can stay financially viable by 2030, with the rest likely to exit or merge to survive.
As reported by Reuters, AlixPartners Asia Leader of Automotive and Industrial Practice, Dr. Stephen Dyer, predicts that by the end of the decade, only 15 companies will dominate 75% of China’s new energy vehicle (NEV) market. On average, each is expected to sell 1.02 million vehicles annually.
As the market matures toward the end of the decade, more brands are expected to exit the industry or merge with others to stay afloat, thus creating a far more competitive and innovative environment for China’s NEV industry.
Dyer said, “China is one of the most competitive NEV markets in the world, with intense price wars, rapid innovation, and new entrants constantly raising the bar. This environment has driven remarkable advances in technology and cost efficiency, but it has also left many companies struggling to achieve sustainable profitability.”
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China’s automotive market is currently facing a full-blown price war with an oversupply of vehicles. According to Reuters, BYD and Li Auto were the only publicly listed Chinese EV makers to achieve full-year profitability.
Regulators in China are calling for an end to the damaging price wars. However, Dyer predicts that these price wars are likely to continue in the form of “non-price incentives such as insurance subsidies, cash rebates, and zero-interest financing to maintain market share and support consumer affordability.”
While the report did not mention any brand names, it’s clear that the effect is already being felt by some. Most notably is Neta Auto, which recently announced that it has entered a “government-led” bankruptcy reorganisation process in China.
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