The earnings outlook for Chinese electric vehicle (EV) makers remains cloudy, as their profit margins further decline amid fierce price competition in the world’s largest auto market, according to JPMorgan Chase.
Mainland China’s automotive assemblers offered a record high 16.8 per cent average discount last month to sustain their sales growth, compared with 16.3 per cent in March, according to a recent report by the US investment bank. It has been tracking the country’s biweekly EV price-change information since 2017. The average discount in 2024 was 8.3 per cent, according to the China Passenger Car Association (CPCA).
That finding exacerbates bearish sentiment about Chinese carmakers’ financial performance this year, as most of the EV assemblers have yet to post a profit.
“Price reflects the balance between supply and demand,” said Nick Lai, head of auto research in Asia-Pacific at JPMorgan. “Price competition has turned fiercer this year. Unfortunately, we have not seen a jump in [EV] demand so far.”
Data from the JPMorgan report showed that an end to the brutal discount war in China’s auto market was not in sight, despite growing calls by Beijing and industry officials to turn away from vicious competition.
The vehicles tracked by JPMorgan comprise both petrol-driven and electric-powered vehicles.
