Recently, the German newspaper “Handelsblatt” published a commentary pointing out the risk of a potential bubble burst in the Chinese electric vehicle market, which is the largest in the world. Subsidies, fierce price wars, and questionable promotional tactics have made the cost of boosting sales very high.
The title of the commentary is “Chinese Electric Vehicle Bubble About to Burst,” with the subtitle “BYD in the Bubble.” It mentions that in 2024, China sold over 12 million electric and hybrid cars. However, some Western car companies believe that the Chinese electric vehicle industry has overheated and is at risk of collapsing.
For instance, the leading player in the market, BYD, although still the largest electric car manufacturer globally, has faced severe overcapacity due to its aggressive expansion strategy. Continuing full production amid weakening market momentum is deemed “fatal”. Moreover, the entry of new competitors like Xiaomi has intensified market competition, leading to escalating price wars that BYD finds hard to escape from.
Additionally, the German newspaper “Die Welt” recently reported on this issue, stating that BYD sells vehicles to its own dealers or rental companies, turning these cars into “second-hand cars” that enter the market at lower prices, consequently driving down the prices of new cars.
Ferdinand Dudenhöffer, head of the German Automotive Research Center, criticized BYD for lacking sales strategy in Europe, blindly entering the market, and damaging the brand’s value.
He emphasized the need for cars to maintain long-term value stability, as it would be disastrous for car owners if the value of a new car is less than 50% of the selling price after three years.
The article in “Handelsblatt” mentions that although Beijing aims to export excess production capacity, challenges such as high tariffs in foreign countries, reservations about products labeled “Made in China,” and market concerns pose significant obstacles for the export of Chinese electric vehicles.
The commentary also draws parallels between the current plight of Chinese electric vehicles and the rapid expansion and subsequent crashes of the Chinese solar energy, wind energy, and real estate industries in the past. Some entrepreneurs even compare BYD to Evergrande, suggesting that it might face a similar financial crisis.
The commentary warns that if the Chinese electric vehicle market does not adjust and repeats past mistakes, it could impact the global industrial landscape.