Despite Largest Share Globally, China Faces Challenges In EV Industry Not that China is facing challenges in the foreign countries, but it is also facing losses and other issues domestically.
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Despite China accounting for 60 per cent share of electric vehicles in the world, its earnings outlook remains bleak. The intense discount war in the country has created a challenging environment for the industry and on top of that, recently Canada has imposed 100 per cent tariff on import of china-based electric vehicles.
If we look at the situation of Chinese EVs in the European Union, the US, and Canada, the industry is witnessing instability and sometime losses following the tariffs imposed by these countries.
The European Union had imposed import tariffs ranging from 27.4 to 48.1 per cent on electric vehicles (EVs) from China which has made its sales slower.
This move came after the United States announced that their own tariffs on Chinese EVs.
Meanwhile, China has condemned the move by Canada and expressed its strong dissatisfaction. In a statement, the country said, "China is strongly dissatisfied and firmly opposes this."
"Canada claims it supports free trade and the multilateral trading system based on (World Trade Organization) rules, but it blatantly violated WTO rules and announced it will take unilateral tariff measures by blindly following individual countries. It is typical trade protectionism," Chinese Commerce Ministry was quoted as stated by the media.
Not that China is facing challenges in the foreign countries, but it is also facing losses and other issues domestically.
Currently, only BYD and Li Auto, two domestic companies, are profitable. In contrast, around 30 other EV companies are struggling to manage losses, even with optimistic sales projections for the world's largest automotive market.
According to the China Passenger Car Association, 878,400 pure electric and plug-in hybrid vehicles were delivered in July, marking a 36.9 per cent increase from the same month in 2023. These vehicles represented 51.1 per cent of all vehicle sales in the country.
Xiaomi, which entered the EV market in March, has acknowledged that it will take time for its new venture to turn a profit due to high research, development, and marketing expenses.
To attract buyers in a competitive market, many domestic EV manufacturers have been reducing prices. These companies face a difficult choice between losing market share by avoiding price competition or struggling with diminishing profit margins due to price cuts.
