At a used car market in Beijing, salesman Ma Hui expressed concern over a fierce price war in China’s electric vehicle (EV) industry, led by BYD, the market leader. This competition is harming profits not only for manufacturers but also for sellers like Ma, who noted that his peers lost money last year due to an oversaturation of new energy cars. Critics are increasingly pointing fingers at China for flooding both domestic and global markets with cheap EVs.
The People’s Daily, the official Communist Party paper, published a warning that the ongoing price war poses risks to the entire automotive ecosystem, warning of unsustainable practices that could threaten workers’ incomes. BYD has drawn significant criticism for its steep price cuts, some up to 34%, which have driven down the prices of their models, like the Seagull mini hatchback now priced at around $7,700.
This aggressive pricing strategy has alarmed auto executives, including Great Wall Motor’s Chairman, who likened the current situation to the troubled property sector and raised fears of an impending crisis similar to the Evergrande situation. The China Association of Automobile Manufacturers has urged companies to avoid selling below production costs, subtly targeting BYD’s pricing actions.
Amid these developments, sellers in the used car market have reported the rise of “zero mileage used cars,” a practice that allows manufacturers to inflate sales figures. Ma noted that this intense competition dissuades consumers from spending in a sluggish economy, as potential buyers may choose to wait for prices to drop further. The overall sentiment in the market reflects significant anxiety about the future direction of the EV industry in China.
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