Inevitable EV “Bloodbath”
He Xiaopeng, the CEO of EV maker Xpeng, says he will add 4,000 people to work on AI for “intelligent driving,” another term for self-driving cars. The company’s investment for the project will be nearly $500 million. He described upcoming worldwide competition across the EV market as a potential “bloodbath.”The sector is amid a series of price wars, including those in the world’s two largest car markets–China and the US.
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Chinese EV production is well ahead of America. “Automakers in China are projected to add capacity for five million cars between 2023 and 2025, most of which are EVs, according to an estimate by Bernstein Research. EV sales in China are expected to grow by around 3.7 million during this period, it said,” according to The Wall Street Journal. EV sales in China rose 169% in 2021 and fell to a 21% growth rate last year. Manufacturing is already outpacing demand in China. Price cuts will be critical to keeping market share.
From China To US
The US EV market has never been as large as China’s, but it mirrors China’s growth rate. After a surge in sales of EVs, particularly Teslas, over the last five years, growth has declined substantially. EV sales for companies like GM and Ford are close to zero. Tesla expects its 2024 sales rate to slow considerably, which means it faces challenges in the US and China.
The EV price wars in America are about to get worse. China’s BYD, the largest EV company in the world, appears to be ready to set up manufacturing in Mexico, which gives it a backdoor into the US. BYD sells cars for well under $20,000 in China. If it can meet that price point from its Mexican plants, no EV company doing business in America will be able to match it.
EV sales have recently been plagued with prices higher than consumers want to pay along with ranges too short for many customers. Now, a price war is coming as well.
