In Beijing’s used car market, salesman Ma Hui is concerned about the ongoing price war in China’s electric vehicle (EV) industry, led by BYD, the market leader. This competition has significantly reduced profits for both manufacturers and sellers like Ma, who noted that “all of us were losing money last year.” The oversaturation of new energy car manufacturers has led to fears of financial instability within the industry, a sentiment echoed by the official Communist Party newspaper, the People’s Daily. In a recent commentary, it warned that “disorderly price wars” harm profits throughout the automotive ecosystem and threaten worker incomes, emphasizing that such unsustainable competition leads to a “race to the bottom.”
BYD has faced significant criticism for its aggressive price cuts, some as steep as 34%, including slashing the price of its Seagull mini hatchback to approximately $7,700. Notably, Great Wall Motor’s chairman compared the situation to China’s troubled property sector, suggesting an impending crisis similar to that of the defunct Evergrande developer. The China Association of Automobile Manufacturers also cautioned against “dumping” vehicles below production costs, indirectly targeting BYD’s pricing strategy.
To combat financial challenges, some sellers have reported a trend of “zero mileage used cars,” which are registered but never driven to inflate sales figures. Ma worries that continued price drops could deter consumers from making purchases amid economic uncertainty, stating that buyers may choose to wait before committing to a purchase, further complicating the market dynamics.
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