In a car used in Beijing, the seller Ma Hui said that he fears that the China’s electric vehicle industry is in a race towards the bottom.
EV manufacturers, led by the country’s market leader, Byd, have dedicated themselves to a forceful price war, depressing earnings for brands, as well as sellers like MA.
“We were all losing money last year,” Ma on his fellow cars used in the market. “There are too many companies that make too many new energy cars.”
China’s business partners have often accused the country of flooding the global market with cheap Chinese EV. These days, similar accusations are flying within China, which raises concerns about financial stress in the industry.
The official document of the Communist Party, The People’s Daily, for example, published a comment on Monday, entitled “The ‘Price War’ in the automotive industry does not lead anywhere and has no future.”
“The” messy ‘Wars’ squeeze benefits throughout the chain, impacting the entire ecosystem and risk the decrease in income for workers, “the newspaper warned. “In the long term, this competition ‘Race to the Bottom’ is unsustainable.”
Byd is causing the greatest fire after announcing price cuts at the end of May for many of its models. Some of the discounts are as steep as 34%. Its cheapest car, the mini hatchback of Gaviota, now costs only around $ 7,700, below approximately $ 10,000.
The intense price war has led the high -profile car executives to sound the alarm, with the chief of Great Wall Motor by calling the “unhealthy” industry.
In an interview with the Chinese media, Sina Finance, on May 23, the president of Great Wall Motor, Wei Jianjun, drew parallel to the real estate sector of China and her now missing son of posters, the developer Evergrande.
“There is already a crisis of ‘Evergrande’ in the automotive industry,” he said. “He has simply not yet exploded.”
A group of the industry backed by the Government has also asked companies to “download” vehicles below the cost of production. In a statement, the Chinese car manufacturers association gave a veiled blow to Byd.
“A certain car manufacturer has taken the front in the launch of important price cuts and many companies have followed their example, which caused a new panic round of ‘Price War’,” said the group.
Byd ruled out Wei’s comment as alarmist and said he believes in fair competition in response to Caam’s criticism.
In a sign of greater voltage, Beijing used car vendors told CNBC about a phenomenon known as “Used cars of zero mileage”, which is intended to help manufacturers and car distributors to inflate sales volumes. This happens when cars are registered and they are pleaded and then marked as sold, but has never been conducted.
Ma said he is worried about where the fierce competition leads. He told CNBC that he sees the impact of intense competition on consumers who are already shy to spend on the economy.
“With the price falling like this, many buyers could wait,” he said.
