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Business Times
18 hours ago
- Automotive
- Business Times
China's EV manufacturers face their ‘Evergrande moment'
YOU know that things have reached an inflection point when China's People's Daily newspaper warns against 'involution' in an industry, noting that firms and factories have been racing to produce the same products and barely making a profit. In this case, the warning was aimed at the 100 or so electric vehicle (EV) makers. That number is, by any measure, way more that any car market, even one as big as China's, can sustain. Evidence that the nation's car market remains oversupplied has been mounting in recent years. As recently as five years ago, there were about 500 firms producing EVs. That their numbers have declined so dramatically provides a useful metric about brutal market conditions. Indeed, one industry executive spoke of an industrial 'elimination round' taking place over the next two years. A few days later, the chairman of Great Wall Motor, Wei Jianjun, was quoted as saying that China's EV industry is experiencing its own 'Evergrande moment', referencing the collapse of the country's most indebted property developer last year. The fear among carmakers (and economists) is that, as it was with the crash of China's property giants, cascading bankruptcies in the EV industry will spread misery not just throughout the automotive sector as suppliers and dealers go under, but, eventually, the wider economy will feel the chill. However, from a macroeconomic perspective, everything is going well. Cut-throat competition is driving efficiency and innovation. For instance, BYD, one of the three car firms actually making some profit, is furiously trying for a breakthrough in autonomous driving with its so-called God's Eye technology. Tesla, which has a big presence in China, says it will unveil its self-driving robotaxis on Jun 12. These vehicles are reported to be undergoing trials in Austin, Texas. Then again, robotaxis were first promised in 2016. It should be noted at this juncture that the consolidation in China's automotive sector hews to a familiar script. That is the way Beijing's industrial policies play out. Subsidies and policy support are bestowed on favoured industry players until they reach a certain size, and when they are deemed ready to compete with anyone in the world. Beijing then stands back and allows the market to sort out the winners from the losers. We have seen how this approach worked with solar panel manufacturers. It is harsh and unforgiving, but it is certainly far better than the system of continual state support for ailing zombie firms, which has now become almost routine in the West. That said, it should be noted that there are some 3.5 million EVs piling up as unsold stock in China, despite incentives Beijing has offered to encourage owners of combustion-engine vehicles to trade them in for EVs. Prices are being cut. One BYD sedan is selling for as little as 69,800 yuan (S$12,487). More significantly, China's top carmakers are still only operating at half capacity. Expect a push to export the surplus. In Asean, Thailand, Indonesia and Malaysia have their own automotive industries. How will they react if a tsunami of cheap, but technically superior, cars swept into their markets? The instinct may be to erect tariffs walls and subsidies, to protect the local industrial base and the supply chains and, above all, jobs. The better option might be to invite the best of China's car producers to set up factories locally and let the market decide the winners.
Yahoo
27-05-2025
- Automotive
- Yahoo
BYD Shares Extend Losses as Price Cuts Throw Spotlight on Sales
(Bloomberg) -- BYD Co. shares extended losses in Hong Kong trading Tuesday — taking their two-day slide to more than 10% — as last week's sweeping price cuts stoked concern of another wave of discounting in China's cutthroat electric car market. NY Private School Pleads for Donors to Stay Open After Declaring Bankruptcy UAE's AI University Aims to Become Stanford of the Gulf NYC's War on Trash Gets a Glam Squad Pacific Coast Highway to Reopen Near Malibu After January Fires The stock fell as much as 4% in morning trading, following Monday's 8.6% drop. The selloff was sparked after the EV giant announced cuts of as much as 34% on 22 electric and plug-in hybrid models in China until the end of June. The move came after the company last month posted its slowest year-on-year growth in vehicle deliveries in more than four years. While April sales rose 21% from a year earlier, that was the smallest monthly gain since August 2020, except for a drop in deliveries in February last year, when the Lunar New Year holiday saw nationwide industry sales contract 22%. Rival Geely Automobile Holdings Ltd.'s compact hatchback Xingyuan last month became the top-selling model in China, overtaking BYD's popular Seagull, according to data from the China Automotive Technology and Research Center. Morgan Stanley analysts said the price competition sparked by BYD is likely to drag on, with ripple effects into the second half of the year. What Bloomberg Intelligence says: BYD's latest price cuts across 22 electric vehicle models highlight its 2025 focus on volume, forcing rivals to deepen discounts or concede sales and market share. China's auto price discounts averaged 15%-16% this year and can potentially increase in 2H, despite government subsidies driving industry growth. - Joanna Chen, autos analyst The steep price cuts have taken some of the gloss off what has so far been a stellar year for BYD. The stock hit a record high last week, it posted its best month of sales in China and outsold Tesla Inc. in Europe for the first time in April, and raised HK$43.5 billion ($5.5 billion) in a Hong Kong share sale in March. Before this week's slide, BYD Hong Kong-traded shares had surged almost 75% this year, and with a market value equal to around $158 billion, is bigger than Ford Motor Co., General Motors Co. and Volkswagen AG combined. On the technology front, it has unveiled a lineup of cars it says can charge in five minutes, and started to make its God's Eye advanced driver-assistance system standard in vehicles priced from 100,000 yuan ($13,900) and include it in several lower-cost models such as the popular Seagull hatchback. Some of the recently discounted models include those equipped with God's Eye. Investors will get more insight into how BYD is tracking when monthly sales for May are released on Sunday. --With assistance from Danny Lee and Chunying Zhang. Mark Zuckerberg Loves MAGA Now. Will MAGA Ever Love Him Back? Why Apple Still Hasn't Cracked AI Inside the First Stargate AI Data Center How Coach Handbags Became a Gen Z Status Symbol AI Is Helping Executives Tackle the Dreaded Post-Vacation Inbox ©2025 Bloomberg L.P. 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
Business Times
27-05-2025
- Automotive
- Business Times
BYD shares extend losses as price cuts throw spotlight on sales
[HONG KONG] BYD shares extended losses in Hong Kong trading on Tuesday (May 27) – taking their two-day slide to more than 10 per cent – as last week's sweeping price cuts stoked concern of another wave of discounting in China's cutthroat electric car market. The stock fell as much as 4 per cent in morning trading, following Monday's 8.6 per cent drop. The sell-off was sparked after the electric vehicle giant announced cuts of as much as 34 per cent on 22 electric and plug-in hybrid models in China until the end of June. The move came after the company last month posted its slowest year-on-year growth in vehicle deliveries in more than four years. While April sales rose 21 per cent from a year earlier, that was the smallest monthly gain since August 2020, except for a drop in deliveries in February last year, when the Chinese New Year holiday saw nationwide industry sales contract 22 per cent. Rival Geely Automobile Holdings's compact hatchback Xingyuan last month became the top-selling model in China, overtaking BYD's popular Seagull, according to data from the China Automotive Technology and Research Center. Morgan Stanley analysts said the price competition sparked by BYD is likely to drag on, with ripple effects into the second half of the year. The steep price cuts have taken some of the gloss off what has so far been a stellar year for BYD. The stock hit a record high last week, it posted its best month of sales in China and outsold Tesla in Europe for the first time in April, and raised HK$43.5 billion (S$5.5 billion) in a Hong Kong share sale in March. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Before this week's slide, BYD Hong Kong-traded shares had surged almost 75 per cent this year, and with a market value equal to around US$158 billion, is bigger than Ford Motor, General Motors and Volkswagen combined. On the technology front, it has unveiled a lineup of cars it says can charge in five minutes, and started to make its God's Eye advanced driver-assistance system standard in vehicles priced from 100,000 yuan (S$13,900) and include it in several lower-cost models such as the popular Seagull hatchback. Some of the recently discounted models include those equipped with God's Eye. Investors will get more insight into how BYD is tracking when monthly sales for May are released on Sunday. BLOOMBERG
Mint
27-05-2025
- Automotive
- Mint
BYD Shares Extend Losses as Price Cuts Throw Spotlight on Sales
(Bloomberg) -- BYD Co. shares extended losses in Hong Kong trading Tuesday — taking their two-day slide to more than 10% — as last week's sweeping price cuts stoked concern of another wave of discounting in China's cutthroat electric car market. The stock fell as much as 4% in morning trading, following Monday's 8.6% drop. The selloff was sparked after the EV giant announced cuts of as much as 34% on 22 electric and plug-in hybrid models in China until the end of June. The move came after the company last month posted its slowest year-on-year growth in vehicle deliveries in more than four years. While April sales rose 21% from a year earlier, that was the smallest monthly gain since August 2020, except for a drop in deliveries in February last year, when the Lunar New Year holiday saw nationwide industry sales contract 22%. Rival Geely Automobile Holdings Ltd.'s compact hatchback Xingyuan last month became the top-selling model in China, overtaking BYD's popular Seagull, according to data from the China Automotive Technology and Research Center. Morgan Stanley analysts said the price competition sparked by BYD is likely to drag on, with ripple effects into the second half of the year. What Bloomberg Intelligence says: BYD's latest price cuts across 22 electric vehicle models highlight its 2025 focus on volume, forcing rivals to deepen discounts or concede sales and market share. China's auto price discounts averaged 15%-16% this year and can potentially increase in 2H, despite government subsidies driving industry growth. - Joanna Chen, autos analyst The steep price cuts have taken some of the gloss off what has so far been a stellar year for BYD. The stock hit a record high last week, it posted its best month of sales in China and outsold Tesla Inc. in Europe for the first time in April, and raised HK$43.5 billion ($5.5 billion) in a Hong Kong share sale in March. Before this week's slide, BYD Hong Kong-traded shares had surged almost 75% this year, and with a market value equal to around $158 billion, is bigger than Ford Motor Co., General Motors Co. and Volkswagen AG combined. On the technology front, it has unveiled a lineup of cars it says can charge in five minutes, and started to make its God's Eye advanced driver-assistance system standard in vehicles priced from 100,000 yuan ($13,900) and include it in several lower-cost models such as the popular Seagull hatchback. Some of the recently discounted models include those equipped with God's Eye. Investors will get more insight into how BYD is tracking when monthly sales for May are released on Sunday. --With assistance from Danny Lee and Chunying Zhang. More stories like this are available on
The Age
27-05-2025
- Automotive
- The Age
Could China's electric carmakers bring on another Evergrande moment?
With Xi Jinping strongly resistant to measures to stimulate consumption and the trade war with America clouding the economy's outlook, China's economy and household consumption will, without extraordinary measures, continue to wane and limit the growth rate of EV sales. Loading BYD's attempt to stimulate demand came after its sales have been running at half the very ambitious targets it set itself for this year. It was targeting a 30 per cent increase in sales, but they are tracking at half that growth rate. BYD had hoped that offering its new 'God's Eye' autonomous driving system as a standard feature would drive a big surge in sales, but that hasn't eventuated. With most of the other major Chinese electric carmakers also budgeting for significant growth, there is significant oversupply and a massive increase in dealers' inventories. As of last month, there were about 3.5 million cars – nearly two months' supply – in unsold stocks, the most in two and a half years. Dealers are going broke, along with suppliers to the sector who are being squeezed by carmakers that are themselves under extreme pressure. It's little wonder, then, that the chairman of Great Wall Motor, We Jianjun, said last week the Chinese auto industry was experiencing its own 'Evergrande.' China Evergrande, the world's most indebted property developer, formally collapsed last year, but was in crisis from the moment Xi introduced the 'three red lines' restrictions on developers' debt levels in August 2020. It was the first of the major dominoes in China's property industry to fall, with the fallout then spreading throughout the construction sector, suppliers and property buyers and subsequently hitting the wider economy. The EV sector in China needs even more consolidation and more sustainable earnings for the remaining players, while China's authorities, as was the case in the property sector, need to do something about the large-scale misallocation of capital and resources -- including the distortions provided by state incentives and mandates -- if the continuing rationalisation of the industry is to remain reasonably orderly. Loading What the oversupply and ferocious competition in the sector has done, however, is drive continuous innovation, with China's electric cars now providing the world's leading-edge EV technology from batteries to software, and global dominance. The companies that are profitable, or have some prospect of achieving profitability, are having success in offshore markets, where the gross margins are far fatter than in their home market. Indeed, with its international success BYD is now more profitable than Tesla, whose profitability has slumped dramatically. The over-production of Chinese EVs and the cost advantage they have over their international competitors because of the scale of the domestic industry, the support they get from central and local governments, the leadership they have in battery technologies and the stranglehold China has on critical raw materials has generated some backlash in other markets. Governments are looking nervously at the oversupply within China, fearing it will be dumped into their markets and wipe out their own auto industries. The US, with 100 per cent tariffs on China's EVs, is effectively closed to the Chinese exports. Europe was open and, with its commitment to phasing out internal combustion vehicles, attractive – until the deluge of Chinese electric cars proved too much for the European Union, which slapped tariffs of up to 35 per cent on imports from China, citing the over-capacity and government subsidies. Even with those tariffs, the margins available in the EU are far greater than in China's domestic market. Some of the Chinese EV companies are wiping out, or at least softening, the losses in their home market with profits in Europe. BYD and some of its peers are also scrambling to build factories within the EU. BYD, which last month overtook Tesla for the first time in EV sales in Europe, will open a plant in Hungary later this year to circumvent the tariff wall and capitalise on its cost and technology advantages over local carmakers. The Chinese EV makers' potential in Europe might be slightly blunted by the EU's decision to relax its planned tightening of emissions standards as part of its longer-term plan to phase out internal combustion engines. The EU is trying to protect its domestic auto industry from both the Chinese invasion and the potential fallout from its own trade confrontation with an aggressively protectionist Trump America. It has given its carmakers a window of three years now to meet tough new standards that were to be implemented this year. Loading While Donald Trump has now deferred his threatened 50 per cent tariffs on EU exports until July 9, Europe's car industry is the most obvious target of US trade sanctions. Because the US market is effectively closed to Chinese carmakers, they are now looking to their own region, South America and Australia to deploy their excess capacity. But they're also facing pushback in some of those markets such as Brazil, which unlike Australia has a domestic car industry. Meanwhile, in some Asian markets stocks of unsold EVs are piling up as demand has already been overwhelmed by supply. Rising protectionism and the prospect of a significant slowdown in global growth as Trump's trade war with everyone is starting to bite are likely to weaken international demand for EVs, even cheap ones from China. That would create even more pressure on the overwhelming majority of loss-making manufacturers to exit the sector or be consolidated with the handful that are, or could be, profitable. It would be a positive development for China, which doesn't want another Evergrande, as well as the rest of the world, which would otherwise be facing a massive dump of Chinese cars that could undermine other nations' car industries and all those who depend on it.
