cross-posted from: https://lemmy.sdf.org/post/37394400
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For all the Chinese government’s efforts to prevent price cuts by market leader BYD Co. from turning into a vicious spiral, analysts say a combination of weaker demand and extreme overcapacity will slice into profits at the strongest brands and force feebler competitors to fold. Even after the number of EV makers started shrinking for the first time last year, the [Chinese] industry is still using less than half its production capacity.
Chinese authorities are trying to minimize the fallout, chiding the sector for “rat race competition” and summoning heads of major brands to Beijing last week. Yet previous attempts to intervene have had little success. For the short term at least, investors are betting few automakers will escape unscathed: BYD, arguably the biggest winner from industry consolidation, has lost $21.5 billion in market value since its shares peaked in late May.
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Auto CEOs were told last week they must “self-regulate” and shouldn’t sell cars below cost or offer unreasonable price cuts, according to people familiar with the matter. The issue of zero-mileage cars also came up — where vehicles with no distance on their odometers are sold by dealers into the second-hand market, seen widely as a way for automakers to artificially inflate sales and clear inventory.
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The pricing turmoil is also unfolding against a backdrop of significant overcapacity. The average production utilization rate in China’s automotive industry was mere 49.5% in 2024, data compiled by Shanghai-based Gasgoo Automotive Research Institute show.
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The Chinese electric vehicle (EV) boom has turned into a dramatic shakeout with 400 Chinese EV companies ceasing operations between 2018 – 2025 […] China’s EV startup explosion was fuelled by generous subsidies, tax breaks, and easy access to local production licenses between 2015 and 2019. According to the International Energy Agency (IEA), this led to an overcrowded market of more than 500 ventures, many lacking core technology, supply chains, or scale.