EV sales in China defy consumer spending slump as price cuts attract buyers

By Linda Lew
 

Electric vehicles remain a bright spot in China’s auto market as manufacturers of battery-powered cars overcame a slump in consumer spending at home thanks to price cuts and new model launches.
 

The leading manufacturers, from BYD Co. to Nio Inc., all reported strong sales growth in May. Seres Group Co., which works with Huawei Technologies Co. to make the popular Aito EVs, saw the biggest increase by delivering 34,100 cars, almost triple the amount from the same time last year. Nio reported a 234 per cent increase in units sold, while Zeekr Intelligent Technology Holding Ltd. saw sales more than double.

BYD, the country’s best-selling brand, sold 330,488 passenger vehicles in May, an increase of just over a quarter compared with last year. Two other EV makers also saw sales growth, with Xpeng Inc. posting a 35 per cent increase and Li Auto Inc. seeing deliveries rise 24 per cent in May. 

The figures buoyed shares, with automakers leading the gains in Hong Kong. BYD shares rose as much as 6.1 per cent as of 11:55 a.m. Nio shares in Singapore gained as much as 5.1 per cent. Li Auto rose 5.25 per cent and Xpeng saw a 1.7 per cent gain.   

The continued growth comes as Chinese EV producers face mounting challenges at home and abroad. Chinese consumers reined in spending on things from clothes to office supplies to autos in April. With the slowing demand for battery-powered vehicles driving up competition, EV makers are discounting and speeding up the launch of new models. BYD intensified the price war by cutting the prices of many popular models in February which led others to follow. 

Meanwhile, access to new overseas markets where manufacturers can charge higher prices is being threatened by trade actions such as potential tariff hikes in the European Union, and in the US, which imposed an import tax of more than 100 per cent on Chinese EVs.

Still, sales at home are seen offering some comfort with EVs and plug-in hybrids expected to grow 33 per cent to 770,000 vehicles in May against a decline of 5.3 per cent for overall deliveries including gasoline cars, preliminary data from the China Passenger Car Association show. The decline is likely due to the week-long Labor Day holiday falling entirely within May this year, the association noted.