China is building more electric cars than you can sell and that announces something dramatic: a manufacturers bleeding

For years, China has cooked its assault on the electric car. As in other sectors, the country has put a cooked pot and has been done with all the ingredients. Little by little, it has been heating the water, browning the sauce and, with everything ready, the fire has risen. The time has come to get the dishes.

And it doesn’t matter if someone stays along the way.

A huge market. China is the largest electric car market. Not only that, by volume, it is the country in which more cars are bought if we add all kinds of technologies. His market is gigantic. To the point that In it, 23.5 million cars were sold In 2024. To get an idea, in the United States 16 million cars were sold and around 12 million cars.

According to data from Carnewschinasales were slightly lower (22.9 million) but the International Energy Agency (IEA, for its acronym in English) and the specialized medium in the Chinese market agree that the barrier of more than 11 million vehicles of new energy sold (category in which plug -in and electric hybrids are included) was broken).

Over low heat. Until last year, European manufacturers had been leaders in the Chinese market. Little by little, local manufacturers have gained ground … until Byd rolled Volkswagen. Among new energy vehicles, more than 60% of sales They are electric cars. And there, Chinese manufacturers have passed over Westerners.

They have achieved it with a determined policy. European manufacturers were offered land and labor at balance prices. Of course, they had to associate with local manufacturers. These manufacturers have learned from the West and, in addition, They have received subsidies from the Chinese governmenteither with the creation of state companies (or partial participation in them), almost free land and facilities and soft loans.

And, at the same time, the State has been taking strategic positions. China controls the supply chain of semiconductors But also the production of Rare earth and of batteries. All this has caused that the cost of producing in China for the Chinese market is much cheaper for its local producers, which has resulted in a better product at a better price than foreign competitors.

Fearless. Once the State has been done with the ingredients and has put the cooker, it has not been afraid to climb the fire with the intention that their marks will eat the western ones in the country. The purchase subsidies have been focused on maintaining a constant sales yield of electric cars and new energy, where China has managed to get ahead.

At the same time, a wave of nationalism well aimed from the State (for the interests of its manufacturers) has moved the purchase interests of consumers. They already see Western brands as a thing of the past. Companies that previously positioned themselves as a luxury product today are obsolete in a market that bets on a type of car without barriers. A car that is the object of mobility but is also karaoke or interactive center where to take a while surrounded by screens.

Overcapacy. Or overproduction, so that we all understand each other. According to data from the Chinese Association of Automobile Manufacturers, In 2024 there were 31,282 million vehicles and 31,436 million were sold. Keep in mind that much of that production, obviously, was sent outside the borders. In fact, already in 2023 The country beat Japan as the largest car exporter in the world.

The problem is that the formula has begun to give symptoms of exhaustion in this 2025. O, as little, of a certain stagnation. Last August, Byd confirmed that he had to redirect your sales prospects. The company I planned to produce 5.5 million of vehicles but its new objective is on the border of the 5 million. With 80% of its sales in China, which by the brake begins to give an idea of ​​the difficulty finding the market to absorb all the cars that are producing.

An unexpected war. That difficulty in putting cars in the market has been the manufacturer himself in his meats. They explain in Reuters That in the Chinese city of Chengdu it is easy to find cars with discounts of 50%. Some of them, the Audi that are manufactured in collaboration with FAW, are sold with up to 60% discount. That war is dilapidating the margin of benefits of brands such as byd that have more muscle than rivals to lower prices and reduce stock.

Because that is another of the obvious symptoms that point to a slowdown in the Chinese market. A few months ago, The concessionaires themselves asked that manufacturers stop sending cars because they were having problems selling them despite the attractive discount. In fact, The State itself has brought together manufacturers To deal with the topic of kilometers 0, which add up as a sale but then are forgotten in stores in the absence of a buyer.

A private market. When China lived its previous price war, we already commented that it was a fire test for some companies. The problem of this wild competition is that manufacturers enter a downward price wheel where cars are ended up without taking out enough benefit to it. So, Tesla and Byd They were the ones that had the entire muscle to destroy the rivals.

But, in addition, two peculiarities in the Chinese market must be taken into account. The first is that the launch rhythm is very high. That makes the companies themselves leave the cars they have launched just a few months or a year ago with their own innovations. This is the case of byd And the announcement that His eye of God would reach all his cars From now on. The client observes that the models and prices are renewed with each launch. Conclusion: delays the purchase, the stock accumulates and the cars are outdated.

But, in addition, manufacturers have to deal with a structural problem. The Chinese state has done our best to, little by little, change the mentality of its citizens. China is a huge country but traditionally the Chinese citizen has trouble spending money. Confucianismwhich professes a good part of the country, encourages frugality. Chinese home savings rates They are among the highest in the world.

A pickle. With the manufacturers putting the turbo to put their cars in the market, exports that are not absorbing enough and a war of prices at the highest, everything indicates that a company crusher has been launched. In Reuters They collect that there are companies buying huge lots of cars and then sell them at the balance price. In other cases, cars accumulate in the fields.

Wei Jianjun, president of Great Wall Motors, said only a few months ago that the industry was living His own “Evergrande”comparing the current situation with the collapse that occurred in the real estate sector and the bankruptcy of this company. The XPEng CEO has a very similar opinion. A few days ago he assured that in five years Just five brands can survive.

Other experts were less catastrophists and bet on the Survival of 15 brands in 2030. It is not too flattering in any case. Currently, it is estimated that there are 150 brands in China that make electric cars. The State’s commitment has been as determined that companies such as Leapmotor pivoted from the sale of audio equipment to the manufacture of vehicles. Others such as child (or Xpeng itself) try to survive fighting with the difficulties of selling a car brand, what is always a guarantee of losses for many years.

The State has risen the fire.

The pressure cooker is whistling.

The best positioned. Given this situation, who are the best positioned? As always, the biggest:

And the rest? Although these large groups are the best positioned to survive, you have to have some other interesting brands whose products can find their market niche in Europe or, at least, sell enough to survive in the local market.

• Xiaomi: The fashion brand. Xiaomi has the advantage of being a gigantic company which allows you to have el Financial muscle to test if the pool has water. It has other advantages in its favor: it has a huge network of stores, which reduces its obligations to create a distribution network. The second is that it is not an unknown outside of China Thanks to its huge volume of devices. Of course, you have to demonstrate that you can compete in a market whose product costs tens of thousands of euros. That is his great challenge.
• SAIC: Its great advantage is that it is a state company. That has allowed him, for example, to buy companies like MG when they were going through very complicated moments and, above all, hole in Europe playing at very low prices. It has a very wide portfolio of brands with different profiles, from the aforementioned mg to Im Motors, focused on luxury electric cars.
• LEAPMOTOR: He has achieved make a million cars in seven years When Byd and Tesla exceeded the decade. It has the advantage of Stellantis’s investment allows you to remain independent in China and, outside the country, have a huge distribution network, in addition to access to conglomerate plants. It is focused on cheap electric cars (and has extended range electrical versions), just what Europe needs.
• XPEng: It is one of the most promising electric car brands. Its approach is similar to that of Tesla: vehicles defined by the software. Very clean and aerodynamic forms that promise great autonomies. They are reaching markets such as Spanish and is already manufacturing in Europe.
• Nio: Another of those brands that are in a huge list to be one of the outstanding manufacturers of the future. In China they have launched systems such as the exchange of batteries and their innovations in terms of autonomy are very promising but you have to deal with huge financial difficulties.

Photo | Byd

In Xataka | Europe has proposed to sell us electric cars and China rubs their hands: it already manufactures 76% of those sold worldwide