by China’s electric vehicle market: big discounts and a fight for survival
China remains the leader in electric vehicle production, offering innovative models with advanced technologies. However, the financial reality for most local manufacturers is far from ideal—only three out of approximately 50 companies are profitable: BYD, Li Auto, and Seres. The rest continue to operate at a loss, trying to attract buyers with hefty discounts.
According to a JP Morgan study, average discounts on electric vehicles in China reached a record 16.8% in April. This reduces business margins, as the difference between production costs and selling prices has fallen to 10% compared to 20% four years ago.
“Almost all of them have fallen victim to price competition,” noted Faith Zhang from CnEVPost.
Export as a survival opportunity
One way out of the crisis for Chinese manufacturers is to increase exports. International sales bring higher profits, and in the first four months of 2025, electric vehicles accounted for about 33% of China’s total car exports.
“This year, price competition has become even fiercer. Unfortunately, we do not yet see significant demand growth,” noted Nick Lai from JP Morgan.
While exports are not a panacea, they could be a lifeline for companies unable to withstand the fierce competition in the domestic market. Many analysts believe that in the coming years, smaller manufacturers will either disappear or be acquired by larger players.
The situation indicates that even in the most dynamic industries, excessive competition can lead to financial instability. Chinese electric vehicle manufacturers are under pressure from both consumers, who expect affordable prices, and investors, who demand profitability. Expanding into global markets may help, but long-term success will depend on companies’ ability to optimize costs and offer unique advantages.
