Brazil Sues EV Giant BYD Over ‘Slavery' Conditions at Plant
Brazilian labor prosecutors are suing Chinese electric vehicle maker BYD Co. and two contractors over allegations of slave labor and human trafficking at the construction site of a manufacuturing plant.
The lawsuit describes 'degrading' conditions at facilities in Bahia maintained by BYD, China JinJiang Construction Brazil and Tonghe Equipamentos Inteligentes do Brasil Co. — currently named Tecmonta Equipamentos Inteligentes Brasil Co. It also alleges irregularities with the visas used to bring the workers into Brazil and the confiscation of their passports.
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CNBC
8 hours ago
- CNBC
In China, fears grow of an EV financial crisis amid pricing war
At a used car market in Beijing, salesman Ma Hui said he fears China's electric vehicle industry is in a race to the bottom. EV makers, led by the country's market leader BYD, have been engaged in a bruising price war, depressing profits for the brands, as well as sellers such as Ma. "All of us were losing money last year," Ma said about his fellow used car sellers in the market. "There are too many companies making too many new energy cars." China's trading partners have often accused the country of flooding the global market with cheap Chinese EVs. These days, similar accusations are flying within China, raising concerns about financial stress in the industry. The official Communist Party paper, the People's Daily, for example, published a commentary on Monday, titled "The 'Price War' In The Automotive Industry Leads Nowhere And Has No Future." "Disorderly 'price wars' squeeze profits across the chain, impacting the entire ecosystem and risking income declines for workers," the paper warned. "Long-term, this 'race to the bottom' competition is unsustainable." BYD is drawing the most fire after it announced price cuts in late May for many of its models. Some of the discounts are as steep as 34%. Its cheapest car, the Seagull mini hatchback, now costs only about $7,700, down from about $10,000. The intense price war has led high-profile auto executives to sound the alarm — with the head of Great Wall Motor calling the industry "unhealthy." In an interview with Chinese news outlet Sina Finance on May 23, chairman Wei Jianjun drew parallels to China's moribund property sector and its now defunct poster child, developer Evergrande. "An 'Evergrande-like' crisis already exists in the automotive industry," he said. "It just hasn't erupted yet." A government-backed industry group has also called on companies not to "dump" vehicles below the cost of production. In a statement, the China Association of Automobile Manufacturers took a veiled swipe at BYD. "A certain automaker has taken the lead in launching significant price cuts and many companies have followed suit, triggering a new round of 'price war' panic," the group said. BYD dismissed Wei's comment as alarmist and said it believes in fair competition in response to CAAM's criticism. In a sign of further strain, sellers at the Beijing used car market told CNBC about a phenomenon known as "zero mileage used cars," which is meant to help auto manufacturers and dealers inflate sales volumes. This happens when cars are registered and plated and then marked as sold, but haven't ever been driven. Ma said he is worried about where the fierce competition leads. He told CNBC he sees the impact of the fierce competition on consumers who are already shy about spending in the down economy. "With the price dropping like this, a lot of buyers might wait," he said.
Yahoo
8 hours ago
- Yahoo
China's carmakers are resorting to tricks to inflate their vehicle sales and Beijing has had enough
Beijing warned the practice of selling new cars with zero miles at a sharp discount in the used car market is just the latest example of 'involution', when domestic companies drag themselves down collectively in a race to the bottom. China's ruling Communist Party has warned domestic carmakers to stop using sales-boosting tricks—or risk triggering a vicious cycle that could drag down the entire industry. On Tuesday, the CCP organ People's Daily took on the practice of selling new cars as used on the cheap through so-called 'zero mileage' discounting. 'This disguised form of price cutting disrupts normal market order and is a striking example of the auto industry's 'involution',' the daily argued on Tuesday, according to a translation provided by Reuters. Involution, or neijuan, is a buzzword that describes a pointless, resource-expending endeavor like spinning on a hamster wheel. But more recently it has come to refer to Beijing's unhappiness its domestic champions weakening themselves by competing in a race to the bottom. 'Once market competition rules are properly enforced, 'zero-mileage used cars' wont be able to run far — or for long,' it continued. Stuffing the sales channel full with nearly new cars at discounted prices is nothing unique to China. The industry has long maintained a practice called pre-registrations where dealers would offer discounted vehicles with extremely low or even symbolic mileage to offload slower moving stock and reach sales targets. But China appears to have taken the practice to an extreme, ridding itself of this fig leaf of symbolic mileage amid a raging price war that is already halfway through its third year. The primary culprit right now is BYD, the country's largest carmaker, which has been slashing prices at a brutal rate, forcing other competitors to either follow suit or lose market share. Late last month it reduced prices across a number of the the starting price of its cheapest model, the Seagull EV hatchback, to the equivalent of $7,800 from nearly $10,000 previously. BYD could not be reached by Fortune for comment. Typically once the industry conditions consumers to expect price cuts, it can create a vicious circle as buyers wait on the sidelines for better deals. Over time it becomes increasingly hard to wean them off discounts. The price war results from years of overinvestment in the car industry, where privately owned companies such as BYD and Geely compete alongside industry newcomers like consumer electronics giant Xiaomi as well as a host of state-owned rivals. The latter often see political interests promoted over market forces at the cost of profits. These include the central government's First Automobile Works (FAW) and Dongfeng, as well as peers like Shanghai's SAIC and Guangdong's GAC that are controlled by their municipal or provincial party leaders. With all these players jockeying for enough of a share to reach critical scale, China now has the estimated installed capacity across to build nearly 50 million cars a year, or twice as many as the industry can sell domestically. All these superfluous fixed costs put enormous pressure on carmakers to boost sales volumes at almost any price just to eke out an existence. Last July, consultancy Alix Partners predicted a shake-out in the Chinese car industry currently featuring 137 electric vehicle brands. Only one out of every seven will be profitable by the end of the decade, it concluded. This story was originally featured on
Yahoo
9 hours ago
- Yahoo
The Silver Lining in Nio's Disappointing Q1 Report
The Chinese EV maker's results fell short of analysts' consensus estimates. Amidst a price war in China, Nio still significantly grew its deliveries. Nio's cost-cutting efforts and operational improvements have bolstered margins. 10 stocks we like better than Nio › Investors came into Nio's (NYSE: NIO) first-quarter earnings report knowing full well it was likely to be a bumpy ride thanks to the brutal price war China's electric vehicle (EV) makers are engaging in. Things aren't likely to get any better soon. Rival BYD slashed prices on 22 vehicles by up to 34% last month, and a raft of other peers are competing for market share amid waning demand in the world's largest automotive market. While this challenging scenario negatively impacted Nio's earnings, there was definitely a silver lining in the Q1 report. Nio reported delivery and revenue growth, but a widening loss. More specifically, total revenue rose 21.5% year over year to $1.6 billion in the first quarter, but fell short of analysts' consensus estimates. Its net loss widened by a staggering 30.2% to $932 million, also worse than analysts had expected. "In the first quarter of 2025, the Company delivered 42,094 smart electric vehicles, marking a solid year-over-year increase of 40.1%," said William Bin Li, founder, chairman, and chief executive officer, in the press release. "Since the beginning of the second quarter, we have seen a steady increase in monthly delivery volume." With Chinese EV prices crashing, overall demand waning, and analysts worrying the market could implode before it rights itself, you'd think it would be challenging to find a silver lining in Nio's results. That would be incorrect, however. The company's efforts to reduce costs and bolster margins are producing meaningful results. Vehicle margin was 10.2% during the first quarter, up from the prior-year period's 9.2% result. Nio noted that the increase was primarily attributable to decreased material costs per unit as the company focused on cutting the fat from its operations. The story was similar for gross margin, which checked in at 7.6%, a sizable improvement over the prior-year period's 4.9%. "Since the first quarter, we have implemented a range of cost control measures, including organizational restructuring, cross-brand integration, and efficiency improvements in R&D, supply chain, sales and services," said Chief Financial Officer Stanley Yu Qu in the press release. "Starting from the second quarter, the Company aims to achieve structural improvements in overall cost efficiency, with continued progress in operational performance." The remainder of 2025 will be huge for Nio and its investors. The company is accelerating the production and deliveries of its two newer brands, Onvo and Firefly. Moreover, in late May, it started to deliver its new ES6, EC6, ET5, and ET5T models, which are expected to contribute to second-quarter deliveries rising by around 25% to 30% year over year. Not only are investors expecting to see top-line and vehicle sales growth, management again expressed confidence that the company could break even during the fourth quarter. Nio is aiming to achieve monthly sales of more than 50,000 units and a vehicle gross margin between 17% and 18%, and to keep cutting SG&A expenses sequentially to bring them within 10% of sales revenue by Q4. The first quarter might have been disappointing for Nio shareholders, but the automaker could kick it into gear for an epic second half if it can execute on its goals. Before you buy stock in Nio, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Nio wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $660,341!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $874,192!* Now, it's worth noting Stock Advisor's total average return is 999% — a market-crushing outperformance compared to 173% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 9, 2025 Daniel Miller has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. The Silver Lining in Nio's Disappointing Q1 Report was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
