HomeNewsThe Discomfort of Chinese Electric Cars: They've Triumphed in Sales, but Their...

The Discomfort of Chinese Electric Cars: They’ve Triumphed in Sales, but Their Companies Are Bleeding

The meteoric rise of Chinese electric vehicles on the global market masks a less glamorous reality for their manufacturers, who face major financial challenges. Despite impressive sales, these automotive giants are seeing their stock values plummet, illustrating the paradox of commercial success tinged with economic difficulties.

The era of European and North American automobiles is giving way to the growing influence of the Chinese car, especially with the expansion of electric vehicles. This transition is evidenced not only by the fact that a Chinese company, BYD, has surpassed Tesla as the top seller of electric vehicles, but also by statements from Elon Musk, CEO of Tesla. Mr. Musk warned that “Chinese companies are becoming the most competitive globally, with the potential to dominate the global market without tariffs or trade barriers.”

However, despite Mr. Musk’s warning, these companies are not currently experiencing a period of calm. While they display solid figures in terms of exports and market share, their aggressive global expansion is accompanied by sharp stock market declines and disappointing financial results. They could indeed dominate the world in the future, but analysts agree that their current hegemony is fraught with pitfalls and challenges.

The Fall of Giants

BYD, a leader in electric vehicle sales, sold 526,409 units in the last quarter of 2023. Despite these impressive figures, its market value has experienced a significant decline. In 2024, the Chinese company lost 10.7% of its market value. Compared to its 2023 highs, it has fallen by 42%, reaching a market value of about $74.5 billion, in contrast to Tesla’s nearly $600 billion, the company it recently surpassed in terms of revenue.

Other companies face similar, if not more difficult, challenges, particularly due to a tough start to the year without the momentum of BYD’s record figures. NIO, Elon Musk’s main Chinese rival in 2021, is going through one of its worst moments. Its market value is barely $10.25 billion after suffering a 27% drop in just the first month of 2024, and a 60% decrease from its 2023 highs.

Great Wall Motors (GWM), another major market player, saw its value reduced to only $21.5 billion after a 15% drop in the first 30 days of the year and a 40% decrease from its February 2023 highs. The same trend is found in other manufacturers like Xpeng, Wuling, and Li Auto. These three companies have experienced respective declines of 36%, 18%, and 22% so far in 2024, and have suffered significant drops from their previous highs, often exceeding 40%.

Price War?

As the growth of electric car deliveries in new markets challenges the entire global industry, not only do these companies lack optimism in the stock market, but they have almost all lost nearly half of their value. Experts attribute this trend to decreasing expectations regarding the explosion of demand over time. Additionally, the presence of a large number of companies competing in a Chinese market on the verge of fierce competitive warfare exacerbates the situation.

The saturation of the domestic market and intense competition have led Chinese companies to seek outlets abroad, increasing electric vehicle exports by 62%. However, this strategy has raised concerns in the European and American markets, where it is suspected that the low prices offered by Chinese vehicles could be the result of public subsidies, prompting the EU to open an investigation.

The possible extension of the price war to the global market represents a threat to the profitability of companies in the sector, as shown by the reduction in profit margins of companies such as BYD and Tesla.

Alan, editor-in-chief, born in 1964 in a picturesque small town in the south, has always been fascinated by the roar of engines and the shine of car bodies. From a young age, he spent hours flipping through his father's car magazines, dreaming of the cars he would one day drive. After obtaining his high school diploma, Alan decided to pursue his passion for automobiles by studying journalism, with the hope of combining his two loves: writing and cars.


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