EV Discounts Reach All-Time High in China, Which Is Unfortunate News | Carscoops

      Many electric vehicle manufacturers may either exit the market or be bought by larger competitors.

      Reported 8 hours ago by Brad Anderson

      In China, the average discounts on electric vehicles rose to 16.8 percent last month, maintaining an upward trajectory.

      Currently, only BYD, Li Auto, and Seres are achieving profitability among the numerous electric vehicle manufacturers in China.

      Increasing exports has become a crucial strategy for Chinese EV brands aiming for better profit margins.

      As automakers around the globe strive to secure their futures in the electric vehicle era, China is maintaining a comfortable lead by rapidly producing next-generation EVs equipped with innovative technology and advanced battery systems. However, amidst the excitement and impressive new vehicles, many of China's EV brands are grappling with a harsh financial reality: they are largely still losing money.

      Read: Seres 5 Outperforms Tesla Model Y in Comfort, But Loses in Key Areas

      Currently, there are approximately 50 electric vehicle brands competing for market share on Chinese roads, out of which only three are considered to be profitable: BYD, Li Auto, and Seres. Despite this, many brands persist in offering substantial discounts to expand their market presence, sacrificing financial stability in the pursuit of sales growth.

      Escalating Discounts

      A study by JP Morgan referenced in the South China Morning Post indicates that average discounts across the industry reached a record high of 16.8% in April, rising from an already significant 16.3% in March. The China Passenger Car Association projects the average discount for 2024 to be around 8.3%. Additionally, average EV prices were reduced by 10% in December. Such aggressive pricing strategies are proving to be unsustainable.

      Last year, the gap between the selling price of an EV and the automaker's costs—inclusive of raw materials, labor, and logistics, known as vehicle margin—fell to 10%, down from about 20% four years prior. Analysts anticipate that many of China’s smaller EV manufacturers will either exit the market or be acquired by larger firms in the coming years.

      “Almost all of them suffered from price competition,” stated Phate Zhang from CnEVPost. “However, if any of them decides to step back from the price war, their sales will decline, further complicating their efforts to achieve net income.”

      Looking Beyond China's Borders

      One possible avenue for relief is through exports. Chinese automakers have started exporting more EVs, where they can achieve better margins. As noted by JPMorgan’s Nick Lai, international sales are becoming increasingly profitable and could provide the necessary leeway for these companies.

      “The price competition has intensified this year, but we have not yet witnessed an increase in [EV] demand,” Lai mentioned. Although the domestic market is substantial, its growth is insufficient to counterbalance the significant discounts being offered.

      Nevertheless, exports are on the rise. In the first four months of 2025, electric vehicles constituted about 33% of China's total vehicle exports, an increase from approximately 25% over the last two years. While it may not be a complete solution, it offers a glimmer of hope for brands aiming to endure the increasingly tough competition in their home market.