The Chinese market for electric vehicles is preparing for a downturn in 2025, according to analysts. This might put a lot of pressure on businesses that are attempting to survive in this competitive market. Sales of new energy vehicles (NEVs) reached almost 11 million units last year, a 42% increase. While the market leader BYD saw their profit rise by more than 40% to about 4.3 million units. They truly hit the mark, surpassing their growth target of at least 20%.
However, analysts at HSBC are only projecting a 20% rise in sales this year. They anticipate a slowdown in BYD's growth to about 14%. Strong sales appear to have helped some struggling businesses survive, but profit margins are becoming more constrained. Just a few companies, including Tesla, Li Auto, and BYD, were able to make money last year. According to HSBC analysts, this position won’t persist forever because they expect the market will undergo significant consolidation in the near future. The combination of subsidies and incentives has helped the electric vehicle market grow rapidly, but things are changing. Last year, Chinese EV manufacturers intensified their pricing war, primarily due to declining battery manufacturing costs and more market competitiveness. For instance, Xiaomi's electric sedan, which boasts incredible technology and features, launched at a lower price than Tesla's Model 3. When giant carmakers such as BYD and Tesla dropped prices, others had to follow suit, reducing profits across the board. A number of local brands began to suffer from sluggish sales growth last year. Human Horizons declared bankruptcy in August of last year after selling less than 8,000 of its high-end EV models in 2023, while Geely's Jiyue EV brand was also at risk of going into bankruptcy in December.
