The electric vehicle sector in China is entering a decisive stage marked by competitive pressure and falling margins. The chairman and founder of BYD, Wang Chuanfu, has warned that the industry is entering a "brutal elimination phase", a consolidation process in which only the strongest companies will survive.
The statements come after the presentation of 2025 results, in which BYD registered a 19% drop in its annual net profit despite maintaining a sales record of 4.6 million vehicles. The adjustment confirms the impact of the price war shaking the world's largest automotive market.
Price war and fall in margins in the Chinese electric car
The strategy of aggressive discounts to compete with manufacturers like Geely, Xiaomi or Huawei has allowed BYD to lead in volume, but at the cost of a strong erosion of profitability.
Wang Chuanfu himself has recognized that the sector has reached a "boiling point," where sales growth no longer guarantees sustainable profits. The company, which has come to surpass Tesla in global electric vehicle volume, has seen how the average price per unit falls significantly in the Chinese market.
Restructuring and employment adjustment in the Chinese EV industry
The tightening of competition has led BYD to adopt internal efficiency measures, including a workforce adjustment close to 100,000 employees, equivalent to around 10% of its workforce.
The company maintains that its competitive advantage lies in its vertical integration, including its own production of batteries and chips, and in its team of more than 120,000 engineers, key to sustaining innovation in a high-pressure environment.
International expansion as a way out
Given the weakness of the domestic market, where sales have shown signs of decline for several months, BYD is accelerating its global strategy.
The group has raised its international sales target for 2026 to 1.5 million vehicles, with the intention that foreign markets represent a substantial part of its future growth. In these regions, margins are higher than in China, which allows to compensate the domestic price war.
Risk of concentration: fewer brands in the Chinese market
China came to house more than 300 electric vehicle manufacturers, but the number has drastically reduced in recent years. Currently, little more than a hundred operate, and the sector anticipates a new wave of consolidation.
Analysts warn that even leaders like BYD could suffer if price pressure continues, which would accelerate the exit of smaller players without sufficient financial or technological capacity.
Impact in Europe: low prices, but fewer competitors
For markets like the European, including Spain, this adjustment phase has a double effect:
- Greater arrival of Chinese electric models at competitive prices
- Possible disappearance of emerging brands in the coming years