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Electric & new energy vehicles
Opinion
SCMP Editorial
Editorial
SCMP Editorial

China’s EV industry should focus on consolidation at home, expansion abroad

With Beijing discouraging ‘irrational competition’, the fewer brands with greater scale that emerge from the consolidation wave should look to opportunities abroad

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Workers assemble Zeekr models at a plant in Ningbo, Zhejiang province, on April 17, 2025. Photo: AP
SCMP Editorial
Editorials represent the views of the South China Morning Post on the issues of the day.
China’s electric vehicle industry faces a wave of consolidation in 2026 as declining domestic demand, softening state support and investor scepticism threaten the survival of dozens of unprofitable manufacturers in the world’s largest car market. To be sure, there are bright spots, with Beijing renewing a trade-in subsidy worth up to 20,000 yuan (US$2,870) per car purchase, although relief from a 10 per cent purchase tax will be phased out from this year. Also, a China-EU deal on a pricing mechanism for EVs is expected to result in more profitable though fewer sales, and a China-Canada deal will slash the tariff on 49,000 EV exports from 100 to 6 per cent.

The industry already shows signs of consolidation. High capital requirements, price wars and chronic overcapacity have forced weaker players to exit. Larger energy groups are acquiring charging networks, while mergers are creating stronger manufacturers. The result is fewer brands with greater scale, a trend Beijing encourages to tackle market fragmentation and “irrational competition”.

Vehicle deliveries are forecast to decline between 3 and 5 per cent in 2026. Only a handful of companies, including BYD – the world’s largest EV maker – and Huawei-backed Seres, have managed to achieve profitability. For most, heavy investment in new technologies has failed to generate adequate returns.

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