11:15 am, July 15, 2024
Global consulting firm, AlixPartners, has predicted that mounting pressure on China’s domestic EV makers from the biggest players will contribute to an increasing rate of attrition for smaller manufacturers over the coming years.
Currently, there are 137 electric car brands operating in China, each vying for a slice of both the domestic and global EV market. But the industry analyst believes this number will drop to just 19 by the end of the decade.
This culling will be predominantly fuelled by the ongoing price war that some of the biggest names in the business are currently embroiled in. The likes of BYD and Tesla continue to consolidate their dominant position by slashing the cost of their EVs.
AlixPartners says that while the average sale price of cars in China fell 13.4 percent in the past year, the average margin of automakers rose to 7.8 percent in 2023 from 6.3 percent the previous year.
‘As long as big players like BYD still have a gross margin, there is always room for a further price war,’ Stephen Dyer, Alixpartners’s Shanghai-based managing director, said at a briefing earlier this month, according to Bloomberg News.
Despite this, the industry analyst predicts that the most powerful Chinese electric automakers will go on to hold 33 percent of the global auto market, and 45 percent of new-energy vehicle (battery electric and plug-in hybrid) sales.
The briefing touched on how these burgeoning Chinese companies have managed to stake their claim in the global market, citing the willingness to take risks and move fast, often meeting minimum safety and regulatory requirements first before making upgrades, as well as encouraging overtime among employees to improve efficiencies.
According to AlixPartners, ‘legacy automakers’ allow staff to carry out a maximum of 20 hours overtime a month, while staff at Chinese NEV makers can do as much as 140 hours overtime a month.
In recent months, BYD has been particularly focussed on breaking new ground, with the recent sponsorship of the Euro 2024 competition bringing the brand to a wider audience.
Auto Trader said it had recorded 189,387 views of its adverts for new and used BYD models since the tournament began on June 14 – up by almost a third versus 142,537 during the previous month.
