By Bloomberg News
Just 19 of China’s 137 current electric car brands will be profitable by the end of the decade, leaving the rest to exit the industry, consolidate or battle for a minor market share, according to consultancy Alixpartners.
A price war that has been running for almost two years has pressured margins at some Chinese EV makers, and could continue as dominate players like BYD Co. and Tesla Inc. seek to consolidate their dominant positions.
“As long as big players like BYD still have a gross margin, there’s always room for a further price war,” Stephen Dyer, Alixpartners’s Shanghai-based managing director, said at a briefing Wednesday.
While the average sale price of cars in China fell 13.4 per cent in the past year, the average margin of automakers rose to 7.8 per cent in 2023 from 6.3 per cent the previous year, according to Alixpartners. Manufacturers have cut costs by squeezing suppliers and moving fast to bring new models to market.
By the end of 2030, Chinese automakers are set to held 33 per cent of the global auto market, and 45 per cent of new-energy vehicle sales, Alixpartners said. However, the consultancy downgraded its forecast for China’s share of the European auto market to 12 per cent from from 15 per cent, given the European Union’s imposition of additional provisional tariffs.