EV price wars fail to boost sales in China

China’s EV makers haven’t seen the boost in sales volumes they’d hoped for following a recent series of price cuts, and earlier optimistic forecasts of a 60% increase in sales this year now seem unlikely to be achieved.

Why it matters

Many buyers are holding off on purchases in the expectation of more price cuts to come, as manufacturers look to reduce inventory. As one Shanghai sales manager explained to the South China Morning Post: “Carmakers and dealers are facing a dilemma – either slash prices further to buoy sales, or stop offering discounts, which could lead to a sharp drop in sales.”

Takeaways 

• While the price war is likely to continue for a few more months, the market will still grow by around a third this year: UBS is forecasting a 35% increase in EV sales, to 8.8 million units.
• Chinese makers dominate the local EV market and will gain further share from international brands which have been slower to make the switch from fossil-fuel vehicles, according to a new Greenpeace report.
• The biggest losers, it says, will likely be Volkswagen (down anywhere between 3 and 7 percentage points) General Motors (down between 3 and 6 percentage points) and Honda (down between 2 and 4 percentage points).
• Greenpeace also predicts that, within seven years, around a third of production capacity for fossil-fuel vehicles in China will lie unused. 
• EV deliveries in China during Q1 amounted to 31% of all car sales (compared to 28% in 2022 and 15% in 2021). “China, the world’s largest auto market, is undergoing a seismic shift,” said Greenpeace campaigner Bao Hang.

Sourced from South China Morning Post