Between Europe and China, tensions are rising, especially when it comes to electric vehicles. With more and more Chinese car manufacturers entering the European market, the continent has taken protective measures to safeguard the competitiveness of local manufacturers. Implementing additional tariffs is one such measure to counter illegal government subsidies for Chinese brands. Will this be sufficient to stem the influx of electric models with attractive price-to-equipment ratios? Only time will tell. However, it appears that not everything is rosy behind the Chinese electric vehicle surge. Surprisingly, very few companies are actually making a profit.
BYD and Li Auto, two Chinese brands, are among the exceptions that are thriving in this sector. According to Song Zhinping, the president of the China Association of Listed Companies, out of the 150 Chinese car manufacturers selling electric vehicles, only BYD and Li Auto are profitable. Li Auto, established in 2015, reported a revenue of 123.85 billion yuan last year with a net profit of 11.81 billion yuan. BYD, the world’s second-largest electric vehicle manufacturer after Tesla, recorded a profit of 30.04 billion yuan. These figures indicate a booming business for these two companies, but not all Chinese manufacturers are in the same position.
Many Chinese car manufacturers are selling electric vehicles at a loss, despite government subsidies and low prices. Companies like Nio and Xpeng, which are also expanding into the European market, are struggling to turn a profit. Nio, for instance, saw its losses rise despite increased revenues in recent years. This trend exposes the challenges faced by Chinese electric vehicle manufacturers in the global market.
According to Song Zhinping, Chinese car manufacturers face a dilemma between producing electric and traditional vehicles. While electric vehicles may not be profitable for them at the moment, they recognize the importance of investing in this technology for the future. The focus is currently on gaining market share internationally rather than immediate profitability. This strategy involves increasing sales volumes by offering competitive prices, even if it means operating at a loss.
In conclusion, the electric vehicle market is highly competitive, with Chinese manufacturers facing both opportunities and challenges in their quest for global expansion. As the industry continues to evolve, it will be interesting to see how these companies adapt to the changing market dynamics.