At a used car market in Beijing, salesman Ma Hui expressed concerns over China’s electric vehicle (EV) industry, fearing it may be entering a “race to the bottom” due to an ongoing price war among manufacturers, primarily led by BYD. This fierce competition is driving down profits not only for automakers but also for used car sellers like Ma, who noted that “all of us were losing money last year.” The intense market pressure has led to complaints from global trading partners about the influx of inexpensive Chinese EVs, which are now causing similar issues within China itself.
A recent commentary from the People’s Daily warned that the current price wars are detrimental, potentially damaging the entire automotive ecosystem and threatening worker incomes. The commentary criticized the “disorderly” pricing strategies that have emerged. In late May, BYD announced significant price cuts, with discounts reaching up to 34%, the lowest of which brought its Seagull mini hatchback down to approximately $7,700.
This has raised alarms among industry leaders, with Great Wall Motor’s Chairman Wei Jianjun comparing the situation to the property market crisis seen with Evergrande. He suggested the automotive sector could face a similar collapse if the situation does not stabilize. The China Association of Automobile Manufacturers also urged companies to avoid selling vehicles below production costs, indirectly criticizing BYD’s strategies. In response, BYD dismissed these concerns as overly dramatic and emphasized its commitment to fair competition.
Salesmen in Beijing have reported an unusual practice of selling “zero mileage used cars” to artificially boost sales, reflecting the industry’s struggles. Ma noted that the aggressive pricing may deter potential buyers, especially in a sluggish economy where consumers are hesitant to spend.
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