In the Chinese electric vehicle market, fierce competition and vicious price wars have led to many car companies facing a shortage of operating capital. According to foreign reports, over one-third of listed car companies have current liabilities exceeding current assets, with BYD being the most severely impacted.
The UK’s Financial Times reported on June 13 that the price wars among Chinese car manufacturers have put pressure on the industry’s balance sheets. The total net current assets of 16 major car companies were 290.5 billion yuan in the first half of 2021, but plummeted to 104.3 billion yuan by the end of 2023, a decrease of 62%.
Based on the latest financial reports of car companies still listed at the end of last year, it was found that more than one-third of these companies have current liabilities exceeding current assets. The situation of BYD’s insufficient operating capital is particularly severe.
By the end of last year, BYD had current assets of 371 billion yuan and current liabilities of a staggering 496 billion yuan, resulting in an operating capital deficit of 125.4 billion yuan, a 36% increase compared to two years ago. The cumulative operating capital deficit of Geely, NIO, Xpeng, BAIC, and JAC Motors was 178 billion yuan.
Yin Xinchi, an automotive industry analyst at Citic Securities, stated that the decline in net current assets indicates an accelerated cash burn rate, leading to increased liquidity risks. With the current trend, it is expected that by 2026, Chinese car companies will enter a new phase of industry consolidation, with some companies facing closures due to liquidity crises.
Reports indicate that the average profit margin of Chinese car companies in the first quarter of this year was 3.9%, a decrease of 0.7% compared to last year, although BYD’s profits showed some improvement. BYD declined to comment on the report’s inquiries.
Recently, China’s internal competition within the automotive industry has become a hot topic. Chairman of Great Wall Motors, Wei Jianjun, criticized BYD in a recent interview with mainland media, stating that their actions pose a serious threat to the Chinese automotive industry and likened the situation to the existence of a “Hengda” within the industry, just waiting to explode.
During the “2025 China Auto Chongqing Forum” held on June 6-7, major car companies criticized the industry’s “internal competition,” with a particularly intense battle of opinions surrounding BYD. BYD’s Brand General Manager, Li Yunfei, criticized the industry as “some people being both bad and stupid,” while Vice President of Geely, Yang Xueliang, who previously supported Great Wall Motors’ Chairman Wei Jianjun’s “Hengda in the automotive industry” theory, retorted with “thieves shouting catch thieves.”
On June 15, the self-media outlet “Car People Media” published an article stating, “The current Chinese auto market is magical yet brutal! On one side, leaders such as BYD, Geely, and Great Wall engage in verbal battles at the Chongqing Forum; on the other side, emerging forces like Nezha (automobile) are deeply embroiled in bankruptcy quagmires, facing plummeting sales and collapsing funding.
“The seemingly chaotic surface actually points to a core issue: amid overcapacity in new energy production and intensifying product homogenization, the industry’s reshuffle has already begun. The intense price wars and internal battles fundamentally aim to clear inventory, seize sales, and compete for market survival.”