Chinese electric cars cut prices regardless, ready to sacrifice profits

There will be about 50 electric and hybrid car models launched in China this year - Photo: SCMP

According to the South China Morning Post , on September 18, Chinese electric car manufacturers are accelerating the launch of new models, in an effort to maintain their position in the competition amid rapid changes in consumer preferences.

However, expensive development costs and fierce price wars are making it difficult for these automakers to make a profit.

More than 50 electric and hybrid models, which use half electric motors and half conventional combustion engines to power their vehicles, will hit the Chinese market this year, according to Shanghai-based consultancy Suolei.

But only a handful of models will have enough sales to cover development costs.

“Carmakers need to ask themselves, is it worth investing billions of yuan to develop a new car that cannot generate good sales without big discounts?

The market is already full of similar products. So there will be products that are left behind in such fierce competition," said Eric Han, senior director at Suolei Company.

In China, the world's largest market for cars and electric vehicles, thanks to growing interest among young people in eco-friendly vehicles over the past two years, new models with advanced autonomous driving systems and longer driving ranges can attract thousands of orders within days of going on pre-sale.

“New models can boost sales, but it's the price cuts that really attract buyers.

“Low car prices have put pressure on manufacturing companies, as most of them need to cut losses to survive in the fiercely competitive market,” said David Zhang, secretary general of the International Intelligent Vehicle Engineering Association.

The Xiaomi SU7 electric vehicle line from manufacturer Xiaomi is considered one of the most successful products in recent times, with 27,307 units sold to customers in China in the second quarter of 2024.

However, Xiaomi said last month that its electric vehicle unit will need time to make a profit because of its huge research and development and marketing costs.

The world's largest electric vehicle assembler, BYD, also said its research and development costs exceeded 48.5% of the company's first-half net income of 13.6 billion yuan.

Currently, only BYD and Li Auto, a Beijing-based company and Tesla's closest rival in the premium electric vehicle segment in China, make a profit from selling electric vehicles.

Meanwhile, China's remaining 50 or so electric vehicle makers are struggling to make a profit.

In April, Goldman Sachs predicted in a research report that the profitability of China's entire electric vehicle industry could turn negative this year if BYD cuts its selling price by another 7%, or 10,300 yuan, on each of its vehicles.

Source: https://tuoitre.vn/xe-dien-trung-quoc-giam-gia-bat-chap-san-sang-hy-sinh-loi-nhuan-20240918155024129.htm