By South China Morning Post | Created at 2024-11-22 00:46:25 | Updated at 2024-11-25 07:16:11
3 days ago
Unprofitable Chinese electric vehicle (EV) makers, ravaged by a discount war at home and higher tariffs abroad, are stepping up cost-cutting measures and new model launches as they strive to survive in the cutthroat market.
Only those that can sustain their operations without resorting to external funding will stay in the country’s EV race as overcapacity woes loom, analysts said.
“As the domestic market becomes saturated and overseas sales in developed economies are hampered by punitive tariffs, the key players will have to be very efficient in cost control and refrain from splashy spending to save powder for the tough business environment ahead,” said Chen Jinzhu, CEO of Shanghai Mingliang Auto Service, an industry consultancy.
“The market has entered a new phase, with all companies expected to face a do-or-die moment soon.”
Among the four unprofitable, publicly traded Chinese premium EV builders – Nio, Xpeng, Geely unit Zeekr and Stellantis-backed Leapmotor – only Nio reported a wider net loss in the three months ending September, year on year. All of them have made plans to stem their losses.
The mismatch between capacity and actual demand is stark. By the end of 2023, EV assemblers in mainland China were capable of producing 17 million electric cars annually, and the overall factory utilisation rate stood at 54 per cent, according to Goldman Sachs.
