On Tuesday, October 29, General Motors (GM) CEO Mary Barra stated that electric vehicle manufacturers in China are facing intense competition, with too many companies selling electric cars in the country, leading to unsustainable price wars.
According to Business Insider, during the TechCrunch Disrupt conference held in San Francisco on Tuesday, Barra made the remarks in response to the increasing sales of electric vehicles in China.
In 2023, there were over 120 brands selling electric vehicles in China, while the United States had only around 60 brands, highlighting the intense level of competition faced by General Motors and other foreign manufacturers in China.
Barra mentioned that the Chinese electric vehicle market is already oversaturated. She noted that the electric vehicle business in China is undergoing “enormous changes,” and the competition is driving prices “lower and lower,” making it unsustainable.
“From the perspective of China, electric vehicles are largely driven by regulatory efforts,” Barra said, referring to the Chinese government’s push for the development of electric vehicles.
“But now, there are over a hundred OEMs in China, mainly focusing on the electric vehicle market,” she added. OEM stands for Original Equipment Manufacturer, providing components for products of other companies.
In recent years, a large number of startups focusing on electric vehicles have been promoting affordable cars in China, posing increasing challenges to European and American automakers.
“You have to consider what is a sustainable business because the current situation is not sustainable,” Barra said. “Out of these over a hundred companies, only a few are profitable.”
The latest data shows that the overall profit margin of the automotive industry in China for the first nine months of this year was 4.6%, lower than the average profit margin of downstream industrial enterprises at 6.1%. In September, the total profit was only 32.4 billion yuan, a 28.5% year-on-year decrease with a profit margin of 3.4%, the lowest so far this year and the second lowest in nearly four years. This trend reflects the fierce competition in the Chinese automotive industry, where compressing profit to boost sales and market share is a choice the manufacturers have to make as reported by Jiemian News.
During the company’s second-quarter earnings call in July, Barra described the situation in China as a “race to the bottom,” which would erode the remaining value of products. She emphasized that the losses there cannot continue indefinitely.
European automakers are also finding it challenging in the saturated electric vehicle market in China. During the third-quarter earnings call earlier this month, Mercedes-Benz reported a significant 53% drop in profit in the third quarter of 2024. The decline reflects intensified competition, especially in the Asian market and the overall slowdown in the Chinese market. The company stated that electric vehicle sales decreased by 31% year-on-year.
To prevent the impact of cheap Chinese electric vehicles on overseas markets, the European Union officially began imposing duties of up to 35.3% on Chinese electric vehicles on Tuesday following an anti-subsidy investigation that found Chinese subsidies were undermining European automakers.
Previously, Canada and the United States have also imposed duties as high as 100% on Chinese electric vehicles.