At a used car market in Beijing, salesman Ma Hui expressed concerns about China’s electric vehicle (EV) industry facing an unsustainable price war. Market leader BYD has spurred aggressive price cuts across the industry, with some reductions reaching up to 34%, significantly affecting profits for manufacturers and sellers alike. Ma noted that all used car sellers faced losses last year due to the influx of new energy vehicles flooding the market, leading to accusations not only from foreign trading partners but also internally within China.
The People’s Daily, the official Communist Party paper, criticized the ongoing price wars, warning that they threaten the entire automotive ecosystem and risk declining incomes for workers. High-profile figures, including the chairman of Great Wall Motor, have likened the current state of the automotive industry to the crisis seen in China’s real estate sector, cautioning of a looming “Evergrande-like” crisis if the situation does not improve.
A government-backed industry group also urged companies to refrain from selling vehicles below production costs. In this context, BYD faced scrutiny for leading the price-cutting trend but defended its actions as part of fair competition.
Amid these issues, sellers like Ma highlighted a troubling trend known as “zero mileage used cars,” where vehicles are registered but not driven, creating inflated sales figures for manufacturers. Ma is particularly worried about consumer behavior in this challenging economic climate, noting that decreasing prices might lead potential buyers to delay their purchases. The ongoing price wars raise significant concerns about the long-term viability of many players in China’s EV market.
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