China's EV Market Is Imploding (msn.com)
- Reference: 0180063866
- News link: https://tech.slashdot.org/story/25/11/13/1446256/chinas-ev-market-is-imploding
- Source link: https://www.msn.com/en-us/news/world/the-chinese-ev-market-is-imploding/ar-AA1QeEPx
> The Chinese electric car has become a symbol of the country's seemingly unstoppable rise on the world stage. Many observers point to their growing popularity as evidence that China is winning the race to dominate new technologies. But in China, these electric cars represent something entirely different: the profound threats that Beijing's meddling in markets poses to both China and the world.
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> Bloated by excessive investment, distorted by government intervention, and plagued by heavy losses, China's EV industry appears destined for a crash. EV companies are locked in a cutthroat struggle for survival. Wei Jianjun, the chairman of the Chinese automaker Great Wall Motor, warned in May that China's car industry could tumble into a financial crisis; it "just hasn't erupted yet."
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> To bypass government censorship of bad economic news, market analysts have opted for a seemingly anodyne term to describe the Chinese car industry's downward spiral: involution, which connotes falling in on oneself. What happens in China's EV sector promises to influence the entire global automobile market. China's emergence as the world's largest manufacturer of EVs highlights the serious challenge the country poses to even the most advanced industries in the U.S., Europe, and other rich economies. Given the vital role the car industry plays in economies around the world, and the jobs, supply chains, and technologies involved, the stakes are high.
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> But the wobbles in China's EV sector demonstrate the downside of China's state-led economic model. China's government threw ample resources at the EV industry in the hopes of leapfrogging foreign rivals in the transition to battery-powered vehicles. The Center for Strategic and International Studies estimates that the government provided more than $230 billion of financial assistance to the EV sector from 2009 to 2023. The strategy worked: China's EV makers would likely never have grown as quickly as they have without this substantial state support. By comparison, the recent Republican-sponsored tax bill eliminated nearly all federal subsidies for EVs in the U.S.
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> The problem is that China's program encouraged too much investment in the sector. Michael Dunne, the CEO of Dunne Insights, a California-based consulting firm focused on the EV industry, counts 46 domestic and international automakers producing EVs in China, far too many for even the world's second-largest economy to sustain.
[1] https://www.msn.com/en-us/news/world/the-chinese-ev-market-is-imploding/ar-AA1QeEPx
amazing (Score:4, Informative)
it's imploding yet duplicating
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What you are seeing is CCP pouring massive subsidies into EV market, where these subsidies resulted in a bubble.
Chris Chapel from [1]China Uncensored [youtube.com] does a good job explaining this.
[1] https://www.youtube.com/watch?v=tCh2N0NJ6M4
Yawn (Score:2)
I’d be somewhat concerned if it was an isolated incident with just EV but China has a decades long history of this kind of corruption. Just look at the amount of real estate that was “sold” but sits vacant as new construction. It dwarfs the EV market by a couple orders of magnitude.
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Actually most of those house are now occupied. The "train stations to nowhere", supposedly an indicator of the imminent collapse of their economy, are now surrounded by industries and towns.
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Not most, by far. Over 60 million housing units are still vacant, and in the previously completely empty cities where people have moved in, occupancy is often at 10% of capacity or so. A lot of the housing has simply been demolished, which has improved statistics somewhat, but a lot of unfinished housing also remains.
None of this is an indicator of collapse of the economy, and it has never been. The economy isn't dependent on people living in ghost towns. What it is an indicator of is massive private invest
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Cities exist not because people couldn't figure out how to build houses elsewhere, but because people had reasons, like jobs, to live in the area. If you build apartment complex in the middle of nowhere, it will be occupied at the local population density regardless of the actual building capacity.
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And those public and private investments are gone. Empty buildings are wasted resources that can't be repurposed without a demand that isn't there. That's a serious economic problem, just like unsold cars losing value on lots.
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> Actually most of those house are now occupied. The "train stations to nowhere", supposedly an indicator of the imminent collapse of their economy, are now surrounded by industries and towns.
No they're not. You're exaggerating. The majority of these developments are still empty. China's declining birth rates coupled with the increased mortality from COVID have thrown in a monkey wrench into their planning. [1]Up to 80 million units are still empty [newsweek.com], with slim prospects for ever being bought or even used as social housing. Most of them are just crumbling ruins at this point. Even where people have moved in (often with heavy government subsidies, essentially turning units into an eastern Section 8 h
[1] https://www.newsweek.com/what-happened-china-ghost-cities-2047985
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All that is to say central planning has historically proven to be less than efficent and continues to do so.
It is still a huge leap to suggest they are on the brink of economic collapse. For example man us cities have pretty acute housing shortage / affordability crisis, would you claim the US economy is on the brink of collapse based on that? or even those cities and regions?
As to EVs so they over produced them.. Does it matter, if the government subsides pay for it, and they don't create system problems
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That's one of the reasons why so many young people in the West are disillusioned with Western democracy. They want somewhere to live, they can't afford anything. Meanwhile in China the government plans ahead, builds massive new cities, and young people can afford to buy a nice modern apartment or house.
Having visited one such development, it was like walking into one of those show houses. Not an IKEA one either, a high end luxury one. I didn't look too closely to see how much was real solid wood and how muc
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I don't know if it's appropriate to call it corruption. It's certainly waste, and some of it is probably due to corruption, but in the end it's the glaring flaw at the heart of planned economies. You can't "solve" the economy without each individual making their own decisions. It's the only way to provide sufficient processing power.
Planned economies (Score:2)
CCP put massive subsidies and pressure into increasing production of EVs and they largely succeeded - there is now massive over-production and massive excessive capacity. If not for EV tariffs, this excess would have been dumped into Western markets, severely damaging domestic production.
Re:Planned economies (Score:4, Interesting)
severely allowing people to afford EVs
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And causing massive damage to global economies and labor markets. We're looking at the gutting of the source of livelihood for millions of people here. According to the AI chatbot I just looked at, approximately 10.8 to 14 million people derive their income from the European auto industry and around 4.5 to 8 million people from the US auto industry.
This is why trade policy protects against dumping.
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Why would China care about that, especially today when the USA is imposing tariffs of 20 to 200% depending on how the wind blows in DC today, there's little progress on comprehensive trade agreements, Trump killed the TPP which for all it's flaws was structured around the idea that the nations in the Asia-Pacific region and the US should band together to have a united front of trade against China, instead we chose the "everyone go it alone" approach, a gift basket to China.
From where I sit there's an altern
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They care about it because it's exactly their plan - they tank the rest of the world's auto industry, then they take over. We've seen this pattern with industry after industry. This is why dealing with them is problematic - they are not operating in good faith.
This is why we have those tariffs. Divesting from China is of utmost national security interest for the United States and should be for the European Union as well.
And just because Orange Man Bad doesn't mean you shouldn't keep your wits about you.
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Sure but we know it's their plan that doesn't tell us anything unique. Every country wants to dominate industries, it's good for countries. The USA wants to dominate the auto industry as well, we're just arguing about methods and economic philosophy is just that, philosophy. At the end of the day what matters is which nation produces the most batteries and cars that people can purchase and who can build the infrastructure to support that and despite our "superior economic philosophy" we are losing.
And no
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As far as tariffs are concerned, you'll probably be surprised to find that a massive amount of right wing pundits are against them for exactly the reasons you state.
What I find funny is how people on the left have suddenly discovered Milton Friedman in their railings against Trump.
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I know another guy in the process of fucking up the global economy.
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European manufacturers are finally getting their act together on EVs it seems. The Skoda Elroq is probably going to be the best selling EV this year, in the UK.
We need EVs, we need to get off oil. Some pain is inevitable, all we can do is delay it, which makes it worse.
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> we need to get off oil.
We don't and we can't. More so, even in context of EVs - you can't manufacture one without significant amount of materials that are derived from petroleum.
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We will never totally stop using oil of course, but we need to mostly stop burning it for fuel, outside of a limited number of applications. We need to do something about plastic pollution too.
I'd say that will he the harder transition to manage. Electrifying everything isn't too difficult and most of the tech is already mature. Replacing or dealing with plastic pollution seems harder, as will be dealing with increasing costs as fuel oil product consumption is greatly reduced.
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"There's no difference between using oil to make durable materials and burning it up to make thing hot"
If you have to lie about what folks on the other side of your argument think you either don't understand them or are just maliciously lying about it. Nobody says "No oil for anything ever" but burning gasoline to move one human being from point A to B is incredibly stupid when we have a better alternative.
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Short term thinking. China could not possibly afford, nor they would want to, subsidize EVs long-term. Dumping cheap EVs would only happen for as long as necessary to kill local EV competition. This is smallpox blankets, only with EVs.
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Detroit is doing its level best to kill EV competition already.
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They don't have to. They only have to subsidize it enough to tank the rest of the world's auto manufacturing. Then, they become the only one left, a monopolist in a market with a huge barrier to entry. They can pull their subsidies at that point and rake in the excess profit.
This is a classic trade manipulation strategy. It's taught in undergrad business classes.
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With the end goal of there only being Chinese auto manufacturers. Is that worth cars being cheaper for a little while?
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They probably forgot to tell the companies they subsidized that they were trying to dump on the global market in order to buy a longer term lead. And that it may not work out too well in the end. I can't imagine any other purpose for them propping it up so hard. The US never became a market for these, but the US trade war has had ripple effects in their other markets and is probably collapsing the propping up that China is doing.
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Yes, such overinvestement wouldn't happen in a capitalist society ... like AI, or telecom, or railways, or... Anyway, AI datacenters also try to get as much as possible subsidies, government contracts, etc. They just have to sell it differently to the government, but it all comes down to "We cannot afford a mineshaft gap"
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I don't understand how AI bubble is possible, as the source of subsidies distorting markets is not obvious to me. Regardless, AI bubble does not disprove the existence of Chinese EV bubble.
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I think the point is that the myth of the "all knowing, all efficient free market will always choose the right move versus the communist central planners" isn't really true at all, they are just as capable of corruption, bureaucratic paralysis, glad handing, and generally bad economic decisions all around. Government or corporations it's just people making decisions and reacting to incentives and many of the incentives in capitalist countries can be wildly perverse.
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Free market is a representation of distributed decision making, where you have hundreds of people evaluating the data and making decisions. This is clearly not happening with AI, as adoption severely lags indicating that people in general are skeptical.
I think a bunch of aging and no longer clearly thinking (and primed to believe in AI based on Science Fiction from their childhood) venture capitalists bought into false promises from Altman and the likes, made massive investments thinking this is going to
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> Free market is a representation of distributed decision making, where you have hundreds of people evaluating the data and making decisions.
It's presented as that and yet we have lived in the era of the "corporate raider", "CEO is king" culture for decades now and the track record isn't exactly holding strong.
Corporations have become condensed and far more vertical than 50 years ago with far less competition (which is really the controlling force more than decentralized decision making ever was) and capital is more concentrated in a few hands than ever before. The economy turns on what places like Blackrock, Silverlake and the Mag7 decide what
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Easier to scale back than to scale down.
Look at it from China's POV, you have this massive manufacturing base and yet in the traditional auto market they aren't kept out by trade deals but the fact it's hard to make inroads in an industry dominated by the Americans, Europeans and Japanese companies.
Along comes the sea change that EV is bringing and if you're china 10 years ago and suddenly those 3 nations are looking to completely drop the ball. Honda and Toyota focussing on dead tech like hydrogen, the Am
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Picking nits - "Those other 3 nations" are not command economies. I think you meant "American, EU and Japanese automakers", as they are the ones making those decisions, not the nations where they reside.
I only mention this because you're comparing a command economy where it is the national government making production decisions, to independent companies in free market economies.
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These are mixed economies, the government creates many regulations, trade agreements and other matters that affect their businesses. There was a reason in 2008 we bailed out the US auto makers, we as a nation value that industry, for the jobs, national security and general prestige and tradition. This isn't central planners VS laissez-faire but levels of mixed-economy VS mixed-economy. To think those industries and state aren't intertwined in many important ways is naive at best.
At the end of the day eco
Archetypal capitalist crisis of overproduction (Score:2)
As described by Karl Marx. This is how capitalism works--a feature, not a bug.
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Only in this case it was centrally planned by CCP and has nothing to do with capitalism or markets.
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Citations:
[1]BYD Got 3.4 Billion to Dominate EVs, Study Says [bloomberg.com].
[2]China's EV makers got about $313 billion in aid over last 15 years [straitstimes.com].
[1] https://www.bloomberg.com/news/articles/2024-04-10/byd-got-3-4-billion-chinese-aid-to-dominate-evs-study-says
[2] https://www.straitstimes.com/business/china-s-ev-makers-got-3129-billion-in-aid-over-last-15-years
Re: Archetypal capitalist crisis of overproduction (Score:1)
Just 3.4bi?? Ford and GM received way more than this just in Brazil alone.
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This one-time subsidy is just what is publicly known. China isn't exactly open and transparent, but the actual size of all subsidies, tax breaks, and 'no work' contracts to all EV manufacturers is approaching 1T USD.
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And Ford received nearly triple BYD [1]https://www.cbtnews.com/ford-s... [cbtnews.com]
What's your point?
[1] https://www.cbtnews.com/ford-scores-massive-9-2-billion-loan-for-electric-vehicle-batteries/
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It's Communist Party of China (CPC), not Chinese Communist Party (CCP).
Yes, it was planned, and it was deliberate. It's a different society and a different economy than the west, but for some bizarre reason Westerners seem unable to comprehend that theirs isn't the only possible way to do things.
[1]https://kdwalmsley.substack.co... [substack.com]
Top China execs forecast more deflation and falling profits ahead. And that's the plan.
In Western economies, deflation is a signal of collapsing economic activity, and even depressi
[1] https://kdwalmsley.substack.com/p/top-china-execs-forecast-more-deflation
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Afte 160 years of Marx being proven wrong, disastrously so, can we please stop pretending he was right?
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Right after they release The Communist Manifesto v2.
Dupe - but a reminder this is a lie (Score:3)
Dupe or not, worth [1]leaving this here [electrek.co] as a reminder that no, China EV sales are not imploding. Debunked rubbish.
[1] https://electrek.co/2025/11/12/ev-sales-still-have-not-fallen-cooled-slowed-or-slumped-media-is-lying-to-you/
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I think you misread the title. That article is dealing with a separate topic. This isn't about sales, it's about production. Overproduction, specifically. The CCP poured money into domestic auto manufacturing, probably in order to dump them globally and corner the entire market, and as a result they built many more cars than they can sell. Even if they sell twice as many, it doesn't matter if they made four times as many as will be sold.
As a result, there are billions of dollars simply evaporating a
As intended (Score:2)
This article clearly is written from a Wall Street perspective, but China is not Wall Street.
Wall Street fears a "crash" above all else, because a "crash" causes existing winners to lose, which is something that cannot be allowed to happen in the US. But China understands that a crash for one person is an opportunity for others, and what matters is overall progress, not just making sure nobody ever loses money. People losing money is part of capitalism and part of the industrial lifecycle, so a "crash" is n
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I don't think you're doing a good or accurate job of describing a Wall Street perspective that is not your own, and thus missed the point. Overproduction is never a success, it's waste. Billions of dollars are being wasted as these unsold cars sit in lots slowly deprecating. Tens of billions of government and private dollars that could have been put to productive use. If they were able to dump those cars in foreign markets, it would serve a purpose, but those markets won't allow China to do it because t
What, again? (Score:2)
I thought it imploded two days ago. Now Slashdot tells me it's imploding again today? Sounds like they have a real problem on their hands.
Deja Vu (Score:1)
News 101: If it copies, msmash pastes [1]https://tech.slashdot.org/stor... [slashdot.org]
[1] https://tech.slashdot.org/story/25/11/12/0150258/chinas-ev-market-is-imploding
Not from the videos I seen lately (Score:2)
EVs catching fire on the roads in China, or going out of control and running people down, scary security can leaks
This is by Design in the Chinese Model (Score:2)
This "implosion" is by design in the Chinese model. The PRC's top objective is to quickly catch up, and in an era where capital was cheap, they essentially decided they would risk overcapacity and waste to beat the West. The central government points at a market they want to enter, incentivizing local and regional governments and private capital to aggressively enter those markets. The government essentially hosts a cutthroat (even by Western standards) capitalist "gladiatorial games" to forge a couple of c
This was always the plan. (Score:1)
Chinese industry is like this. Lots of companies pop up doing the same thing, most of them fail, the best ideas are scooped up by the companies that remain, and a few strong sustainable companies survive. This is not just a Chinese thing. It happens in the USA, too. Most American tech startups fail; 70% fail between years two and three and most fail in the first five years. China will take an economic hit when most of their car companies tank, but they’ll weather the storm better than the USA will whe
Yes it does! (Score:4, Informative)
BTW: Did you hear China's EV Market Is Imploding? [1]https://tech.slashdot.org/stor... [slashdot.org]
[1] https://tech.slashdot.org/story/25/11/12/0150258/chinas-ev-market-is-imploding