--- title: "China’s Electric Car Industry Is in Deep Trouble" description: "Compared to the US EV market, China's seems to be progressing along healthily — but rampant price wars are causing massive issues there." date: "2025-09-04" modified: "2025-09-04" authors: - name: "Noor Al-Sibai" job_title: "Senior Staff Writer" link: "https://futurism.com/authors/nooralsibai" url: "https://futurism.com/chinas-electric-car-industry-trouble" categories: - "Advanced Transport" - "Electric Vehicles" tags: - "BYD" - "china" - "economy" - "electric vehicles" --- # China’s Electric Car Industry Is in Deep Trouble ![Compared to the US EV market, China's seems to be progressing along healthily — but rampant price wars are causing massive issues there.]() *\Image: Yang Haiyong / VCG via Getty\* China's electric vehicle industry is, by most accounts, experiencing unprecedented boom times: the [cars are cheaper](), consumers [more primed to purchase them](), and there are [lots of viable options]() outside of Tesla. Unfortunately, that competition comes with a price — or rather, with a price war. As the [*New York Times* reports,]() rabid competition among about 50 of the country's top EV automakers has led to repeated price-slashing in a manic hunt for new buyers. As those manufacturers race to the bottom, it's causing an immense financial squeeze: many have started having trouble paying their suppliers to meet demand, instead imploring state-run banks to help them build more factories. In other words, it's a startling reversal of expectations: in China, the world's largest communist country, an unfettered free market is driving down prices so far that it's *threatening* the auto sector; in the United States, which has long championed the capitalism, the auto industry is run entirely by established players, and [required a massive bailout in late 2008]() to keep it and [the economy afloat](). Authorities in China, which [does money]() and [manufacturing very differently](), are clearly hoping to avoid a similarly expensive and embarrassing crisis. The Chinese government has begun campaigning against what is, as the [*NYT* reported in a July story]() about the issue, widely known there as "involution": a cycle of excessive competition leading to unsustainable deflation, or lowered prices. Pitched as something that would benefit both the country's EV industry and its economy, the anti-involution push hasn't exactly borne any fruits just yet. As the [*Associated Press* reported]() back in June, 17 Chinese automakers — including BYD, which surpassed Tesla as the [world's largest EV manufacturer]() in 2024 — pledged that they would pay their suppliers within 30 days of parts received. A recent compliance report, the *NYT* notes, shows that that hasn't yet happened, and only three automakers that are either partially or fully state-owned had set up payment plans. A huge part of the [involution problem]() — which economists say hurts other industries, including steel, batteries, and petrochemicals, among others — appears to be that China's EV industry writ large seems to have inherited a toxic worldview from Elon Musk, whose Tesla investments in the country laid the groundwork for EV manufacturing. "This is a race to dominate, not a race to profitability," said Bill Russo, the CEO of the Shanghai EV consulting firm Automobility, in an interview with the *NYT*. Much like the rash of AI startups in the US that will invariably peter out before long, China's booming EV industry is likely to shrink by the end of the decade. According to a [recent prediction]() from the global consulting firm AlixPartners, only about 15 percent of the 129 brands full or partial electric vehicle brands recorded in China last year will still be making money in 2030. Stephen Dyer, the head of AlixPartners' Asian automotive arm, suggested that although "more than that \[number of Chinese EV makers\] will keep going," many "will require deep-pockets investors to keep them going." In the meantime, Beijing is concerned that if EV manufacturers keep borrowing from state-run banks to keep building more and more cars with more and more bells and whistles — BYD’s luxury Fangchengbao Bao 8 SUV, for instance, has a dashboard-controlled [drone that takes off from the roof]() and sends its AI-enhanced footage to the driver's phone — it could result in an economic crisis. And if you're concerned about the wellbeing of the global economy, you'd better hope it doesn't come to that. **More on Chinese EVs:** [*China Is Using Trump's Tactics Against Him to Corner the EV Market*]() ## Author At Futurism, I've often been drawn to unpacking the narratives that underlie technological, scientific and medical progress, with a special interest in areas of conflict and ambiguity that end up setting agendas and steering the fates of both elites and the hoi polloi. I'm a committed generalist, but I often find myself returning to work involving NASA and the private space sector, the effects of AI on media and society, and the mechanics of the pharmaceutical industry, with a specific focus on the spread of GLP-1 drugs like Ozempic and Wegovy. Prior to Futurism, I worked for publications ranging from Media Matters and Truthdig to Raw Story and Bustle. I'm also the author of "Myspace Scene Queens," a 2024 title in Instar Books' acclaimed "Remember the Internet" series. My work at Futurism has been cited by outlets including the New Yorker, Slate, Nieman Lab, the Verge, the MIT Technology Review, the Sunday Times, and the Daily Beast. I grew up in North Carolina, attended the University of North Carolina at Asheville, and now live in Brooklyn, New York. In my free time, I'm an avid reader and music fan; you can probably find me at a local poetry reading, concert, underground rave, or DJ set. I'm the proud parent of an ineffable orange cat named Mee-Mow. ### Author social links [Bluesky]()