Chinese EV Makers Set to End the Year on a High Note

China's EV Market Continues to Flourish

Despite a fierce price war and attempts by European nations to instigate a trade war, China's electric vehicle (EV) market is set to retain its title as the world's leading electric auto market as 2024 draws to a close. The country's major EV producers concluded the third quarter on a high note compared to the previous year, with robust deliveries reducing the need for price reductions, as reported by Bloomberg.

Analysts Predict a Sales Surge in Q4

Analysts are forecasting a significant increase in sales for the fourth quarter. Sales of EVs and hybrids are skyrocketing, fueled by expanded subsidies, which in turn are boosting stock prices. Tesla had its best quarter in China, with EVs and hybrids accounting for approximately 53% of new car sales in September. Bloomberg Intelligence analyst Joanna Chen stated, “Industry demand has been better than expected since the third quarter following China’s beefed-up subsidies but many automakers still need a major push in the fourth quarter to hit their annual sales targets.” She added that the first nine months usually contribute 70% of annual car sales and automakers below that threshold are under greater pressure to increase discounts in the quarter.

EV and Hybrid Sales Soaring

Sales of EVs and hybrids are soaring, thanks to expanded subsidies that encourage the trade-in of older cars. This policy led to Tesla's best quarter in China, with EVs and hybrids making up 53% of new car sales in September.

Chinese EV Sales Expected to Rise

Chinese EV sales are predicted to increase further following a recent directive for government agencies to increase purchases of new energy vehicles. Companies such as Zhejiang Leapmotor, Nio, and Zeekr are thriving through major deals and brand expansions. Top-sellers BYD and Geely are on track to hit ambitious sales targets of 4 million and 2 million, respectively. BYD's earlier pricing strategies triggered months of market-wide discounting. Yale Zhang, managing director at Shanghai-based consultancy AutoForesight, said, “I do not see a need to launch another price war. Most of them are in pretty good shape. The majority of these NEV or carmakers will reach their volumes.”

Fourth Quarter Predicted to See Surge in Auto Spending

The fourth quarter is expected to see a surge in auto spending, driven by new EV launches and a year-end rush to utilize trade-in subsidies, according to Yuqian Ding of HSBC Qianhai Securities. Ding’s data shows that EVs require fewer discounts, while gas cars maintain peak discounts of about 22%, the highest in three years. European brands like Volkswagen, Mercedes, and BMW, which had a difficult third quarter in China, may resort to deeper price cuts. AutoForesight warns of a potential premium segment price war, with traditional luxury car production down 4% year-over-year, potentially ending 15 years of growth.

Bottom Line

The Chinese EV market's resilience and continued growth, despite various challenges, is impressive. It's clear that policies such as trade-in subsidies and directives for government agencies to purchase new energy vehicles are driving this growth. However, the potential for a price war in the premium segment could disrupt the market. What are your thoughts on these developments? Do you think the Chinese EV market will continue to thrive? Share this article with your friends and let's get the conversation started. Don't forget to sign up for the Daily Briefing, which is delivered every day at 6pm.