Great piece, the Western car makers simply missed the boat on EVs through their own bad decisions / short term profit maximization. As you say, the loss of the Chinese sales remove a financial buttress for their domestic operations with the result that they will have to close domestic low-utilization and loss-making plants and will find it very hard to fund the ICE to EV transition. All the while as the Chinese EV manufacturing leaders get better and better, and build more and more plants in Europe.
A major issue holding back exports by the likes of BYD is that they have to increase capacity so fast just to maintain domestic market in a market growing at 40% a year. Australia and the UK, which have not erected anti-China tariff walls, may be a leading indicator of what happens to the EU once the Chinese plants are up and running and the Chinese market becomes saturated (by end of 2026 at the latest most likely).
Yes it has been really bad argumentation about Chinese "overcapacity" and exports. Good to see Bloomberg talking about European overcapacity and that you write about the suppliers. Still I wonder if getting outcompeted and overcapacity in China is only a JV problem?
It seems fierce competition is hurting some of the domestic brands too. In the overall domestic sales this year one of the largest Chinese brands Changan lost 22%, BEV brand Aion lost 29% and Haval is down 32%. In BEV brands domestic sales we also see Neta losing 43%. This I would guess must create overcapacity if they don't directly close plants or let another brand use them. Changan and Haval are growing exports this year, so that would mean capacity going from domestic to export, sure this is ICE not EVs as often claimed. While looking on exports MG falling 21% this year could mean overcapacity, without exports.
While some foreign brands are losing on total sales they are starting to grow in domestic BEV market this year like VW up 51% and Toyota 44%, even BMW up 15%. So they are behind but some slow transitions are going on.
It would be really interesting to get a nuanced picture of the domestic market and exports. Any good explanation for Aion, Neta and MG losses in sales? Then another deeper discussion is who is selling with a profit in the market, as NIO, Xpeng, Xiaomi and so on is growing capacity while losing capital. These companies have so far probably only made money for suppliers as CATL and BYD.
Changan falling and failing transition (slower BEV growth than VW, Toyota and BMW) should be discussed looking also on their "new JV" brands Deepal and Avatr. I remember some years ago when BAIC was leading the EV charts and then completely falling away. There could be some relevant back stories to these newer losers too.
Personally I will stick on my substack to write about BYD with some glances on the main competitors, but it would be great to read an indepth piece on the domestic competition!
SAIC, Changan, GAC, FAW, and Dongfeng are all significantly exposed to the drop in foreign sales through their joint-ventures and even their own brands are heavily oriented to ICE vehicles. For GAC, even their Aion EV brand has falling sales.
The current winners are BYD, Geely, Li, Xiaomi, Huawei-backed AITO and perhaps also Nio with its new cheaper Onvo brand (the L60 is an amazingly low priced Model Y competitor) may also start to be a winner (and possibly also Xpeng gaining some lustre with its Mona M03). Tesla is struggling to maintain sales in a market growing at over 40% per year, with the result that its market share is crumbling.
With the new set of BYD PHEVs being priced on par and even below the Japanese and German ICE competition, and the latest round of cheaper BEVs, the reduction in ICE sales is gathering pace. This could very significantly intensify in Q4, so the Chinese sales numbers will be very interesting in the next months.
Ha ha, good point about “over capacity” being an inevitable aspect of transition from legacy to new technologies. I can’t wait to order Xiaomi’s SU7 or XPeng’s Mona M03, and if there really was “overcapacity”, these vehicles would have arrived in Malaysia by now!☹️😀
Great piece, the Western car makers simply missed the boat on EVs through their own bad decisions / short term profit maximization. As you say, the loss of the Chinese sales remove a financial buttress for their domestic operations with the result that they will have to close domestic low-utilization and loss-making plants and will find it very hard to fund the ICE to EV transition. All the while as the Chinese EV manufacturing leaders get better and better, and build more and more plants in Europe.
A major issue holding back exports by the likes of BYD is that they have to increase capacity so fast just to maintain domestic market in a market growing at 40% a year. Australia and the UK, which have not erected anti-China tariff walls, may be a leading indicator of what happens to the EU once the Chinese plants are up and running and the Chinese market becomes saturated (by end of 2026 at the latest most likely).
Yes it has been really bad argumentation about Chinese "overcapacity" and exports. Good to see Bloomberg talking about European overcapacity and that you write about the suppliers. Still I wonder if getting outcompeted and overcapacity in China is only a JV problem?
It seems fierce competition is hurting some of the domestic brands too. In the overall domestic sales this year one of the largest Chinese brands Changan lost 22%, BEV brand Aion lost 29% and Haval is down 32%. In BEV brands domestic sales we also see Neta losing 43%. This I would guess must create overcapacity if they don't directly close plants or let another brand use them. Changan and Haval are growing exports this year, so that would mean capacity going from domestic to export, sure this is ICE not EVs as often claimed. While looking on exports MG falling 21% this year could mean overcapacity, without exports.
While some foreign brands are losing on total sales they are starting to grow in domestic BEV market this year like VW up 51% and Toyota 44%, even BMW up 15%. So they are behind but some slow transitions are going on.
It would be really interesting to get a nuanced picture of the domestic market and exports. Any good explanation for Aion, Neta and MG losses in sales? Then another deeper discussion is who is selling with a profit in the market, as NIO, Xpeng, Xiaomi and so on is growing capacity while losing capital. These companies have so far probably only made money for suppliers as CATL and BYD.
Changan falling and failing transition (slower BEV growth than VW, Toyota and BMW) should be discussed looking also on their "new JV" brands Deepal and Avatr. I remember some years ago when BAIC was leading the EV charts and then completely falling away. There could be some relevant back stories to these newer losers too.
Personally I will stick on my substack to write about BYD with some glances on the main competitors, but it would be great to read an indepth piece on the domestic competition!
SAIC, Changan, GAC, FAW, and Dongfeng are all significantly exposed to the drop in foreign sales through their joint-ventures and even their own brands are heavily oriented to ICE vehicles. For GAC, even their Aion EV brand has falling sales.
The current winners are BYD, Geely, Li, Xiaomi, Huawei-backed AITO and perhaps also Nio with its new cheaper Onvo brand (the L60 is an amazingly low priced Model Y competitor) may also start to be a winner (and possibly also Xpeng gaining some lustre with its Mona M03). Tesla is struggling to maintain sales in a market growing at over 40% per year, with the result that its market share is crumbling.
With the new set of BYD PHEVs being priced on par and even below the Japanese and German ICE competition, and the latest round of cheaper BEVs, the reduction in ICE sales is gathering pace. This could very significantly intensify in Q4, so the Chinese sales numbers will be very interesting in the next months.
I have.a section on the Chinese competition in my latest coverage of the global car market "The Ongoing Collapse of the Western Car Industry - A Quarterly Report". https://rogerboyd.substack.com/p/the-ongoing-collapse-of-the-western
Ha ha, good point about “over capacity” being an inevitable aspect of transition from legacy to new technologies. I can’t wait to order Xiaomi’s SU7 or XPeng’s Mona M03, and if there really was “overcapacity”, these vehicles would have arrived in Malaysia by now!☹️😀