Analysts foresee a significant shakeout in the next few years. Alixpartners, a consultancy firm, predicts that out of the 137 electric car brands curr
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China’s electric vehicle (EV) market is experiencing explosive growth, but this rapid expansion comes with its own set of challenges. While Western automakers worry about this fast-moving competition entering their markets, a lesser-known story is the intense pressure Chinese EV brands face from each other.
Analysts predict a brutal shakeout in the coming years. With a staggering 137 electric car brands currently operating in China, Alixpartners, a consultancy firm, expects only 19 to be profitable by 2030. This harsh prediction stems from a relentless price war that has squeezed margins and forced many players to the brink.
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Established giants like BYD, with their healthy profits, can continuously slash prices, suffocating smaller rivals with lower margins. Unable to compete, these companies are forced to follow suit, further escalating the price war. This aggressive competition has already claimed victims, with WM Motor filing for bankruptcy in 2023. Alixpartners anticipates many more to follow.
Survival of the fittest: Consolidation looms
The analysts predict a clear outcome: unprofitable brands will either exit the industry entirely or become niche players catering to a small market segment, a report by Bloomberg stated. Meanwhile, established players like BYD and Tesla are expected to solidify their dominance. In fact, Alixpartners recently projected that Chinese automakers will capture a staggering 33 per cent of the global car market by 2030.
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One alarming detail from the report concerns the working conditions in China’s new EV factories. Allegedly, workers can be forced to work a staggering 140 overtime hours per month, compared to a maximum of 20 hours in legacy automaker factories. This extreme workload raises serious concerns about worker safety and well-being in the race to compete.
China’s EV market presents a fascinating picture of innovation and fierce competition. While some will undoubtedly thrive, many others face a harsh reality. Only the strongest will survive the coming consolidation, leaving behind a transformed landscape dominated by a select few.
First Published Date: 14 Jul 2024, 09:35 AM IST