[Beijing Diary] China's Electric Vehicle Market Begins Sorting the Wheat from the Chaff

A period of upheaval has arrived in China’s electric vehicle market, which has rapidly emerged as the world’s largest. Subsidies that supported rapid external growth have been cut off, and as the industry enters price competition, marginal companies have begun to appear.

Local electric vehicle manufacturer Aiways, which once aggressively pursued overseas expansion and marketing to the extent of preparing for a Nasdaq listing, has recently faced financial difficulties and is unable to pay employees’ salaries on time. Its official application is also not functioning. Until 2021, the company was performing well, having signed vehicle export contracts with 11 countries.

Ford China has begun workforce reductions. Ford China has not denied local media reports on the 10th that it will lay off more than 1,300 employees. Instead, it explained, "China is an important market for Ford, and we will promote sustainable development of our business in China," adding, "We will build a more efficient and flexible organization and invest resources in core businesses."

[Image source=Yonhap News]

Leading Motors, which led the low-speed electric vehicle sector until 2018, recently filed for bankruptcy in court, and Japanese automaker Mitsubishi announced that it will temporarily halt new car production in China for three months starting in March. Japanese brands, which had been favored in China, have recently shown sluggish performance; Mitsubishi’s sales in China in the first quarter of this year reportedly amounted to only about 5,300 units. Among Chinese netizens, there is speculation that Mitsubishi might completely withdraw from the Chinese market (although the company denied this).

Around the same time, Warren Buffett sold more shares of China’s BYD, the world’s largest electric vehicle manufacturer, reducing his stake from as high as 20% to 9.87%. At the Berkshire Hathaway annual shareholders meeting held on the 6th in Omaha, Nebraska, he expressed concerns about the automotive industry as a background explanation. In an interview with CNBC last month, Buffett mentioned that Berkshire Hathaway would not rush to sell BYD shares but said, "We will look for better investment opportunities."

As of March, the electric vehicle penetration rate in China reached 30%. This is more than double the global penetration rate (14%) and far exceeds that of Europe (19%) and the United States (7.8%). After rapid growth, the prevailing view is that quantitative sales will plateau for the time being, and the market will enter a phase of sorting out the winners and losers.

Korean companies, whose market share in China has fallen to the 1% range, have encountered difficulties even before tasting the boom. Local media reported that Weda Kia, Kia Motors’ local joint venture, has implemented up to one year of rotating unpaid leave starting in June, paying only minimum wage due to financial difficulties. The company explained via its official Weibo, calling it a "normal adjustment to innovate in line with the new era," and stated it would "restructure the work system and expand recruitment of local elite talent." It also said, "Kia headquarters has full confidence in China and will firmly deepen its cultivation of the Chinese market," announcing plans to increase exports from the Yancheng plant to more than 200,000 units annually by 2026. The Korean finished car industry is expected to prove this confidence through marketing that accurately understands the Chinese market, new car launches tailored to it, and tangible results.

This content was produced with the assistance of AI translation services.