At a used car market in Beijing, salesman Ma Hui expressed concerns about the electric vehicle (EV) industry in China, fearing it is entering a “race to the bottom” due to aggressive price wars. Led by BYD, China’s leading EV manufacturer, numerous companies are cutting prices, significantly impacting profits across the sector, including among used car sellers like Ma, who noted that many were losing money last year.
The intense competition has raised alarms from various stakeholders, as accusations emerge within China that local companies are flooding the market with cheap EVs. An editorial from the People’s Daily cautioned that these “disorderly price wars” threaten industry sustainability and could lead to income declines for workers.
BYD has come under fire for substantial price reductions, with discounts up to 34% on many models, including its Seagull mini hatchback, now priced around $7,700. Auto industry executives have labeled the situation as “unhealthy,” with Great Wall Motor’s chairman comparing it to the crisis faced by the property sector and the notorious Evergrande developer.
Additionally, a government-supported group urged manufacturers not to sell vehicles below production costs, hinting at BYD’s role in starting the price cuts. Despite criticism, BYD defended its practices as part of fair competition.
Amid these challenges, sellers reported an alarming trend of “zero mileage used cars,” where vehicles are registered and sold without having been driven, suggesting attempts to inflate sales numbers. Ma noted that consumer hesitancy to spend in a declining economy may exacerbate the existing competitive strains, leading potential buyers to delay purchases.
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