BYD’s Seagull small electric car was unveiled at the 20th Shanghai International Automobile Industry Exhibition at the National Convention and Exhibition Center (Shanghai)
VCG | Visual China Group | Getty Images
Shares of Chinese electric vehicle makers have retreated at the start of the new year as fierce competition and an ongoing price war weigh on automakers’ profitability while overall market sentiment remains weak.
Hong Kong listed stocks Nioh and Xpeng Plunged more than 18% and 16% respectively ideal car It’s down 12% year to date.BYD and Zhejiang Leapmotor In 2024, they will decrease by nearly 2.5% and 12% respectively.
“We expect competition in the domestic market to remain intense and put pressure on pricing and profitability,” Bernstein analysts said in a report on China’s electric vehicle industry earlier this month.
Morgan Stanley also highlighted concerns about competition in a report on Wednesday: “China’s auto market has had a volatile start to the year as competition and macro uncertainty persist, with investors remaining cautious.”
In mainland China, Passenger car electric vehicle sales growth slows to 28% Fitch Ratings cited data from the China Association of Automobile Manufacturers showing that by the third quarter of 2023, car sales will grow 108% from the same period last year.
The growth slowdown will deepen in 2024, According to Fitch Ratings. Fitch Ratings said: “Amid economic uncertainty, we expect China’s domestic passenger vehicle demand to grow slightly to nearly 22 million units in 2024.”
The slowdown warning comes as automakers have been trying to boost deliveries. Xpeng Motors sets record Electric vehicle sales in December were 20,115 units, an increase of 78% compared with the same period last year, and vehicle delivery volume in the fourth quarter exceeded 60,000 units for the first time. Li Auto’s fourth quarter delivery volume The number was 131,805, an annual increase of 184.6%.
BYD overtook Tesla to become the world’s best-selling electric vehicle brand in the fourth quarter, outselling its U.S. rivals.
Competition and price war
Competition in China’s electric vehicle market is increasingly fierce BYD, Li Auto and Geely Automobile achieved their 2023 sales targets, while Xpeng Motors and NIO failed to achieve their targets.
“The competitive landscape will be more challenging, and price pressure will follow. Although demand for electric vehicles will remain elastic, the industry will face three major challenges on the supply side: overcapacity, the launch of new models, and the entry of new technologies such as Huawei The rise of mobile phone players and Xiaomi, this shows that competition is becoming increasingly fierce.” Bernstein said in the report.
HSBC China auto analysts said in a December report that more than 100 new electric vehicle models are expected to be launched in China by 2024.
Many domestic electric vehicle manufacturers such as NIO, Huawei, and Zeekr have recently launched new electric vehicles. Among them, Xpeng Motors launched its latest X9 large 7-seater electric vehicle on January 1, intensifying competition. Even Chinese consumer electronics company Xiaomi is gearing up to launch its first electric car in an increasingly competitive market.
Tesla made multiple rounds of price cuts last year, including in China, with domestic rivals BYD, NIO, Li Auto and Xpeng Motors following suit.
“We expect the market to consolidate as a result, with smaller niche EV players requiring capital for development in order to merge with or be acquired by stronger market players,” Fitch Ratings said. November.
As Chinese EV makers strive to attract customers with newer products and lower prices, their profitability will come under greater pressure. Indeed, Morgan Stanley warned that 2024 will be “tougher as… China remains relatively saturated.”
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