"85% of Chinese Electric Vehicle Companies Unable to Turn Profit by 2030"

Among 137 Chinese Electric Vehicle Brands, Only 19 Are Profitable
BYD and Tesla's Low-Price Competition Leads to Declining Margins

Amid forecasts that China will dominate the global automobile market in the future, an analysis has emerged suggesting that less than 15% of Chinese electric vehicle companies will be profitable by 2030.

According to Bloomberg on the 11th (local time), global consulting firm AlixPartners stated in a report, "Out of 137 Chinese electric vehicle brands, only 19 are expected to be profitable by 2030," adding, "The rest will either exit the industry or compete for shares in minor markets."

[Image source=AFP Yonhap News]

The main reason most Chinese electric vehicle companies remain unprofitable is attributed to price competition in the electric vehicle market. The price wars led by industry giants such as BYD and Tesla over the past two years have caused the margins of some Chinese electric vehicle companies to decline.

Steven Dyer, Managing Director at AlixPartners, emphasized, "As long as large companies like BYD continue to maintain gross profit, there is still room for additional price wars."

AlixPartners pointed out, "While the average selling price of cars in China fell by 13.4% in 2023 compared to the previous year, the average margin of car manufacturers increased from 6.3% to 7.8% during the same period," noting, "This was possible because major manufacturers squeezed suppliers to lower production costs and quickly launched new models."

This cost advantage in producing Chinese cars and the rapid pace of new product development are considered key growth drivers accelerating China's dominance in the global automobile market. Last month, AlixPartners predicted, "While growth in the US and European automobile markets is slowing, China is leading short-term volume growth," forecasting that by 2030, Chinese brands will account for 33% of the global automobile market and 45% of new energy vehicle sales worldwide.

They particularly highlighted that the development period for new cars by Chinese automakers is only half (20 months) of the industry standard (40 months). Chinese brand cars have an average market launch period of 1.6 years, which is 2 to 3 years faster than non-Chinese brands.