China's EV Price War Was Built On Cars Sold At a Loss (autoblog.com)
- Reference: 0183951182
- News link: https://tech.slashdot.org/story/26/06/18/0033211/chinas-ev-price-war-was-built-on-cars-sold-at-a-loss
- Source link: https://www.autoblog.com/features/chinas-ev-price-war-was-built-on-cars-sold-at-a-loss
> For years, the Chinese auto industry has employed a hostile price war to kneecap global competitors. Armed with massive state subsidies, cheap raw materials, and an aggressive "scale-first" business model, Chinese automakers flooded the market with electric vehicles priced so low that legacy manufacturers stood no chance to compete. How did they do it? Simple, they couldn't. They did it anyway. Reports from [2]CarNewsChina show that Chinese automakers [3]have been selling vehicles at a loss until a recent law passed by the Chinese government banned below-cost sales of new vehicles. During the ongoing sales slump in China caused by rolled-back subsidies and direct government intervention banning below-cost sales, the truth behind the rapid expansion of the Chinese auto industry has been exposed.
"By the first quarter of 2026, China captured 32 percent of the global auto market, with its New Energy Vehicles (NEVs) controlling an incredible 61 percent of global share," the report notes. Yet that dominance has come at a steep cost: throughout 2025, "the profit margin for China's auto industry plunged to 4.4 percent and dropped further to a historic low of 3.2 percent in early 2026."
"Gross profit, not net profit, per vehicle, plummeted to a mere $2,000. We can expect the net figure to be loss-making." Autoblog adds: "Data shows over 70 percent of Chinese car sales were loss-making. This left more than half of the country's auto industry in the red. Great Wall Motor (GWM) even saw net profits drop 17 percent despite steady revenue growth."
China's EV price war has now hit a wall. New regulations are discouraging below-cost sales, rising material costs are forcing automakers to cut discounts and raise prices, and reduced tax incentives are weakening domestic demand. To sustain growth, manufacturers are increasingly [4]turning to exports .
[1] https://slashdot.org/~schwit1
[2] https://carnewschina.com/2025/12/27/profit-margin-of-chinas-auto-industry-was-4-4-2000-usd-per-vehicle-second-lowest-in-history-jan-to-nov-2025/
[3] https://www.autoblog.com/features/chinas-ev-price-war-was-built-on-cars-sold-at-a-loss
[4] https://hardware.slashdot.org/story/26/06/10/1728212/byd-to-install-thousands-of-5-minute-ev-chargers-across-europe
Re: You cannot trust China to tell you the truth (Score:1)
Says the lying americans ?
Re:You cannot trust China to tell you the truth (Score:5, Funny)
Source: Donald Trump
Good thing we have Elon Musk though.
And it gets worse! (Score:3, Informative)
And when people tell you it's fine and other car manufacturers "can't compete" just remember that while this is outlawed in China itself, [1]the Chinese Yuan is deliberately undervalued so it's even cheaper as an export and so is even more undercut! [economist.com]
[1] https://www.economist.com/china/2026/02/19/why-the-imfs-newest-report-finds-that-the-yuan-is-undervalued
Re:And it gets worse! (Score:5, Insightful)
So what? This is literally capitalism and because it comes from China, everyone is all baby about it?
Is this a problem? yes... but its also capitalism. you cant wave away "capitalism" when it benefits you, but not others and then be upset when others are benefiting and you are not.
This is more a problem for the companies to fix, but they wont, because US taxpayers will pay for the bail out, yet again while the correction of "capitalism" never happens due to it.
We are backwards on a lot of our policies and governance here, and the point of capitalism is looking a lot more like communism and Oligarch rule.
And Open AI ? (Score:3)
OpenAI is running ChatGPT at a loss.
That's how the world works.
Sojust like every other tech growth story (Score:5, Insightful)
Amazon took nine years to reach profitability. OpenAI posted an operating loss of 20bn. And most pertinently, Tesla took 17 years to reach profitablity. They all got significant state support to the tune of many billions, as well, as have all of the big three US car OEMs over the decades.
Treating this as some kind of gotcha is just idiotic double standards.
The difference between the Chinese and US automakers is what they did with the state support and the time afforded to them by being able to operate at a loss. The Chinese automakers used it to build innovation systems capable of launching new models in 18 months vs the 5 to 7 years it takes the US OEMs. The US OEMs, bar Tesla, used it to finance BAU, and more fool them, and they’re paying the price now. Tesla used it to do some weird mix of innovation and making Musk grotesquely rich.
Re:Sojust like every other tech growth story (Score:5, Interesting)
The "innovation" of China "being able to launch new models in 18 months" is f*ing embarrassing. Not for them, but for [1]all the stupid, blindingly obvious shit other auto manufacturers just weren't doing at all like "model it in a f*ing computer before going to all the trouble of building a prototype you tenth wits". [ieee.org]
[1] https://spectrum.ieee.org/gm-ai-design
Re: (Score:3)
The visible components like agile development are quite readily copyable in principle*, but not the underlying systems that make them feasible. I don’t just mean things like the reuglatory system; BYD has 110k R&D engineers!
* Things like decision-making culture are really hard to shift in practice.
Re: (Score:2)
Tons of engineers, and they're mostly poorly paid with terrible future prospects. They're just trying to survive, not get married and have kids. Even when they get married, they look at their lives and say, "We can't really afford a kid, and even if we push through, we won't have the money to ensure they have a good life, let alone two kids have good lives. What prospects will they have if ours are so dark?" China is going to win some of the industrial war but lose themselves.
Re: (Score:1)
> The Chinese automakers used it to build innovation systems capable of launching new models in 18 months vs the 5 to 7 years it takes the US OEMs. The US OEMs, bar Tesla, used it to finance BAU, and more fool them, and they’re paying the price now. Tesla used it to do some weird mix of innovation and making Musk grotesquely rich.
Not sure if making a new car model every 18 months is a good thing. ;) Even for phone models this seems to be too aggressive from the environment perspective. And EV's are supposed to be environment friendly and not make EV Waste
Re: (Score:2)
Similar to phones though, you don't have to buy every 18 months. The one thing it might do though is affect second hand prices more, which is likely a good thing for affordability.
Re:Sojust like every other tech growth story (Score:4, Informative)
The Chinese government funds innovation in China, while in the west it is private enterprise driven by the profits.
In China the government lead the development of technology with Government Guidance Funds and a somewhat bureaucratic process but with national long-term goals. [1]https://en.wikipedia.org/wiki/... [wikipedia.org] A significant difference.
[1] https://en.wikipedia.org/wiki/China_Government_Guidance_Fund
Re: (Score:2)
Remember that the West also used direct government money to finance R&D. It's just that it happened decades ago (following WW2 mostly). China is just a few decades late in that game, due to its own history, but is maybe pushing it further instead of letting the market handling it (and we all know the market isn't self-regulating as much as its defenders claim).
Re: (Score:2)
> while in the west it is private enterprise driven by the profits.
Thats what the cold-war era propaganda said. In reality, public-private partnerships werte essential to the post-war economic boom.
DARPA, public infrastructure, aerospace , ... Everybody subsidises.
Re: (Score:3)
Many of the big Western car manufacturers sold EVs at a loss initially too. I had an original Nissan Leaf that was heavily discounted and came with a 0% loan.
Re: (Score:2)
> Amazon took nine years to reach profitability.
I'm not sure Amazon is a good example here. The company famously opted to reinvest its free cash flow into growing the business, rather than saving them and booking them as net income. They likely could have been profitable sooner otherwise.
Also, I am not aware of Amazon receiving billions in government support in the 1994-2001 timeframe.