AlixPartners Releases Latest Report
"Only 15 Out of 129 Brands Expected to Survive"
Excessive Price Competition in China... Majority Failing to Turn a Profit
Global consulting firm AlixPartners has issued a warning that if Chinese new energy vehicle (NEV) companies do not stop their excessive discount competition, only 15 out of the current 129 brands will survive within the next five years.
According to the South China Morning Post (SCMP) on July 4, AlixPartners stated in its latest report that less than 10% of brands will be able to generate profit by 2030, making this prediction. However, the report did not disclose the names of the companies expected to survive.
The 15 surviving companies are projected to account for about 75% of China's electric vehicle and plug-in hybrid market by 2030. The annual automobile production of these surviving companies is expected to average 1.02 million units.
Stephen Dyer, head of Asia automotive at AlixPartners, said, "China is one of the most competitive NEV markets in the world," and pointed out that "fierce price competition, technological innovation, and the emergence of new players continue to shape the industry."
He added, "This environment has led to remarkable progress in terms of technology and cost efficiency, but many companies are struggling to achieve sustainable profitability."
In fact, BYD conducted discount sales on 22 electric vehicle and plug-in hybrid models throughout June. The price adjustment included the compact SUV 'Seagull,' which was offered at 55,800 yuan (approximately 1,062,000 KRW), a 20% reduction from the previous price and the lowest across the entire lineup. The mid-size sedan 'Seal' line, which received the maximum discount rate of 34%, was sold at 102,800 yuan (about 1,959,000 KRW).
According to AlixPartners' report, apart from BYD, Li Auto, and Aito, no other Chinese electric vehicle company is profitable on an annual basis. Dyer warned that if Chinese manufacturers do not stop their self-destructive low-price competition, the number of profitable manufacturers could fall to fewer than 10.
He also noted that mergers between companies in China are expected to proceed more slowly than in other countries. This is because local governments may support companies that, even if unprofitable, play an important role in the regional economy, employment, and supply chains.
To break through this situation, entering new markets such as Europe is essential. AlixPartners predicts that Chinese electric vehicle companies will expand their annual production in Europe to over 800,000 units by 2030. Their market share, which was only in the 4% range in 2022, expanded to 8-9% as of 2024. By 2030, this could increase to over 10%. However, the European Union (EU) has also begun investigations to apply antitrust laws, believing that government subsidies are behind the Chinese electric vehicle incursion into the European market.
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