Only 15 electric vehicle brands in China will be financially viable by 2030, AlixPartners says
These 15 brands are projected to account for approximately 75% of China's EV and plug-in hybrid market by the end of the decade, each averaging annual sales of 1.02 million vehicles, AlixPartners said, without specifying brand names.
However, consolidation in China is expected to proceed more slowly than in other markets, said Stephen Dyer, head of AlixPartners' automotive practice in Asia, because local governments may support non-viable brands due to their importance to regional economies, employment and supply chains.
'China is one of the most competitive NEV (new energy vehicle) markets in the world, with intense price wars, rapid innovation, and new entrants constantly raising the bar,' Dyer said.
'This environment has driven remarkable advances in technology and cost efficiency, but it has also left many companies struggling to achieve sustainable profitability.'
China's automotive market, the world's largest, is currently facing a price war and significant overcapacity, both of which are straining profitability. Aside from BYD and Li Auto, no other publicly listed Chinese EV maker has achieved full-year profitability.
Chinese regulators have called for automakers to halt the price war. However, Dyer said it would likely continue, but through 'hidden' factors such as insurance subsidies and zero-interest financing rather than direct price cuts.
The capacity utilisation ratio at Chinese car plants fell to an average of 50% in China last year, the lowest in a decade, pressuring profits, Dyer said.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Recorder
7 hours ago
- Business Recorder
Only 15 electric vehicle brands in China will be financially viable by 2030, AlixPartners says
BEIJING: Only 15 out of the 129 brands that currently sell electric vehicles and plug-in hybrids in China will be financially viable by 2030, as intense competition forces consolidation and some to exit the market, consultancy AlixPartners said on Thursday. These 15 brands are projected to account for approximately 75% of China's EV and plug-in hybrid market by the end of the decade, each averaging annual sales of 1.02 million vehicles, AlixPartners said, without specifying brand names. However, consolidation in China is expected to proceed more slowly than in other markets, said Stephen Dyer, head of AlixPartners' automotive practice in Asia, because local governments may support non-viable brands due to their importance to regional economies, employment and supply chains. 'China is one of the most competitive NEV (new energy vehicle) markets in the world, with intense price wars, rapid innovation, and new entrants constantly raising the bar,' Dyer said. 'This environment has driven remarkable advances in technology and cost efficiency, but it has also left many companies struggling to achieve sustainable profitability.' China's automotive market, the world's largest, is currently facing a price war and significant overcapacity, both of which are straining profitability. Aside from BYD and Li Auto, no other publicly listed Chinese EV maker has achieved full-year profitability. Chinese regulators have called for automakers to halt the price war. However, Dyer said it would likely continue, but through 'hidden' factors such as insurance subsidies and zero-interest financing rather than direct price cuts. The capacity utilisation ratio at Chinese car plants fell to an average of 50% in China last year, the lowest in a decade, pressuring profits, Dyer said.
Business Recorder
8 hours ago
- Business Recorder
Chip design software firms climb as US lifts curbs on China exports
Shares of Synopsys and Cadence Design Systems jumped on Thursday after the U.S. lifted export curbs on chip design software to China, easing uncertainty around access to the crucial market. The restrictions, announced in late May, had essentially cut off the market that brings over 10% of revenue for the industry's major players, hitting forecasts and knocking down shares. The export resumption means both the companies will only lose one month of revenue in the current quarter, Mizuho analysts said. The easing trade tensions may also clear the path for long-awaited Chinese approval of Synopsys's $35 billion buyout of engineering software firm Ansys, the analysts added. Synopsys, which had pulled its forecast in May due to the curbs, rose 5.5%. The company said on Wednesday it is still assessing the impact of export restrictions on China on its financials. Cadence gained 6.1% and hit a record high of $330.09, while Ansys rose about 3.5%. Germany's Siemens , the third major player in the electronic design automation tools sector, was up 1.5% in Frankfurt. Wall St recovers with help from Nvidia, Tesla 'This marks a distinct warming of relations and a small ceasefire in the chips war,' said Susannah Streeter, head of money and markets at Hargreaves Lansdown. Still, she cautioned that the move did not signal a broader shift on high-end chip exports from companies such as Nvidia. 'The US will remain concerned about the technological prowess China has developed, and its use of US intellectual property.' Successive U.S. administrations have sought to restrict China's access to advanced American chip technology, citing concerns that it could be used to strengthen Beijing's military. But the export curbs have also fueled a surge in domestic chip design activity in China, aided by generous state subsidies. They have also stoked fears of retaliation, with analysts warning that Beijing could delay or block approval of the Synopsys-Ansys deal in response. The deal, which has received merger clearance in every jurisdiction other than China according to the companies, carries a deadline of July 15 for its closure with an option to extend until January next year.
Business Recorder
8 hours ago
- Business Recorder
TSX hits record high as investors assess economic data, trade talks
Canada's main stock index hit a record high on Thursday as investors assessed economic data from Canada and the United States, while a U.S.-Vietnam trade pact renewed optimism about global trade agreements ahead of the July 9 tariff deadline. The S&P/TSX composite index gained 0.3% at 26,952.6 points. Data showed that Canada's trade deficit in May was as expected and narrowed after April's record-breaking numbers as total exports rose, and imports fell. Exports and imports to the U.S. dropped to their lowest levels in May, excluding the pandemic year of 2020. Meanwhile, U.S. President Donald Trump signed a trade deal with Vietnam on Wednesday. 'It looks as if we're moving towards more certainty with respect to the tariff situation…as we get closer to an outcome that's so positive, the markets begin to get a little bit excited,' said Robert Gill, portfolio manager at Fairbank Investment Management. On the TSX, technology stocks led sectoral gains with a 1.4% rise. Cybersecurity firm BlackBerry rose 3.3%. Conversely, an index of communication stocks fell about 1%. Energy stocks fell 0.5% tracking a decline in oil prices. Nuvista Energy fell 3.2% after announcing updated annual production guidance due to third party midstream delays. Mining shares edged 0.2% lower, tracking a fall in gold and copper prices. Copper miners Capstone Copper down 2.1%, Teck Resources down 2.3%, and Ero Copper down 2.7%, were among the bottom performers on the main index. Also supporting market sentiment was the Trump administration lifting export restrictions on Chinese-bound shipments from chip design software developers and ethane producers. In the U.S., data showed job growth was solid in June while the unemployment rate fell to 4.1%. Additionally, the U.S. House of Representatives advanced Trump's sweeping tax-cut and spending bill, paving the way for a possible vote on the legislation later in the day ahead of the July 4 holiday.
