Just 19 of China's 137 electric vehicle brands to be profitable by decade's end: Report
Just 19 of China's 137 current electric vehicle (EV) 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 dominant players such as BYD and Tesla seek to consolidate their dominant positions.
"As long as big players such as BYD still have a gross margin, there's always room for a further price war," Dr Stephen Dyer, AlixPartners' Shanghai-based managing director, said on Jul 10.
While the average sale price of cars in China fell 13.4% in the past year, the average margin of automakers rose to 7.8% in 2023 from 6.3% 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 hold 33% of the global auto market and 45% of NEV sales, AlixPartners said.
However, the consultancy downgraded its forecast for China's share of the European auto market to 12% from 15%, given the European Union's imposition of additional provisional tariffs.
In other takeaways from its briefing, AlixPartners said Chinese automakers have grabbed an advantage by:
🚘 Taking risks and moving fast – meeting minimum safety and regulatory requirements first before making upgrades (most of which can be done with software updates after delivery).
🚘 Separating the development of hardware and software, set up independent NEV brands and securing financing and local government support.
🚘 Having national-level investment in battery and material technologies, involving suppliers early and, in some cases, taking advantage of vertical integration.
🚘 Improving efficiency with organisational structure and an overtime working culture. While workers at legacy automakers do a maximum of 20 hours of overtime a month, staff at Chinese NEV makers can do as much as 140 hours of overtime a month.
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RedDevil7 : Useless article....
bullrider_21 OP RedDevil7 : Cut-throat competition in China. Only the best will survive. This makes China EV makers great.
RedDevil7 bullrider_21 OP : These type of article is intentional. They purposely picture a negative outlook for China Brands, without even considered the western brands which could potentially "eliminated" totally from competition in EV.
No need to pay attention