The battle for dominance in China’s electric vehicle (EV) market has entered a fierce phase, marked by aggressive cost-cutting demands and a relentless price war. Manufacturers like BYD and SAIC Maxus Automotive are squeezing suppliers for steep price reductions as they fight to maintain profitability and market share in an increasingly saturated domestic market.
BYD, the world’s largest EV manufacturer, recently requested a 10% price cut from its suppliers starting next year, according to a leaked company email. He Zhiqi, BYD’s executive vice president, described the market competition as a “decisive battle” requiring the entire supply chain to contribute to cost reductions. While BYD later claimed such negotiations are standard practice in the industry, the scale of these demands highlights the financial pressures weighing on manufacturers.
SAIC Maxus Automotive, a division of the state-owned SAIC, followed suit with similar demands, citing an oversupply of vehicles in China. With dozens of EV brands vying for attention, the market has become not just the world’s largest but also its most unforgiving. This intensifying competition has eroded profitability, pushing manufacturers into cash-draining battles for survival.
Tesla, which has consistently adjusted its pricing to stay competitive, recently announced a $1,400 price cut for its Model Y in China, reflecting the market’s unsustainable price war. Meanwhile, Chinese brands like Hozon Auto have resorted to drastic measures, including layoffs and salary cuts, to manage cash flow. Hycan Auto, once a promising player in the market, is now labeled as a “company with abnormal operation” by Shanghai regulators, having failed to compensate laid-off workers.
Despite these challenges, the Chinese EV market continues to grow at a rapid pace. From January to October, domestic sales of fully electric and hybrid vehicles reached 9.75 million units, a 34% increase from the previous year, according to the China Association of Automobile Manufacturers. Of those, one million vehicles were exported, reflecting China’s ambition to dominate international markets.
BYD remains the dominant player, holding a 35% market share in China and selling 2.9 million vehicles domestically in the first 10 months of 2024—a 35% increase year-over-year. Globally, BYD has entered the top 10 automakers by total sales and is set to surpass Ford and Honda. However, its aggressive international expansion, including plans for factories in Mexico, faces uncertainty due to geopolitical risks and potential U.S. trade policies.
As competition intensifies and price wars deepen, the Chinese EV market reveals a sobering truth: even in a booming industry, growth often comes at an unsustainable cost. The question remains whether these manufacturers can adapt without collapsing under the weight of their own ambitions.