China's surplus EV offloads expected to intensify competition

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China's surplus EV offloads expected to intensify competition

Published: 10 Jun. 2025, 14:55

Audio report: written by reporters, read by AI

New cars, among them new China-built electric vehicles of the company BYD, are seen parked in the port of Zeebrugge, Belgium, Oct. 24, 2024. [REUTERS/YONHAP]

Concerns are growing in Korea’s automotive industry over China’s push to off-load its oversupplied electric vehicles (EV) at low prices, with competition expected to intensify particularly in emerging markets where China holds significant sway.

According to the auto industry on Monday, Chinese EV makers are expected to begin exporting their surplus vehicles at discount prices as they struggle with both oversupply and weak domestic demand.

Last month, Chinese EV giant BYD fired the starting gun by announcing price cuts of up to 34 percent on 22 of its models. Although China’s Ministry of Industry and Information Technology attempted to intervene by stating on May 31 that “there are no winners in a price war,” the overheated competition has yet to cool down.

More than 100 Chinese automakers are currently crowding the market, contributing to production overcapacity. According to the China Passenger Car Association (CPCA), automobile inventory in China hit 3.5 million units in April — the highest level since December 2023 — despite many plants operating below capacity. Bloomberg, citing data from Gasgoo Automotive Research Institute, reported Monday that the average factory utilization rate in China's auto sector last year was only 49.5 percent.

If Chinese EV makers are successful in off-loading these excess vehicles, Korean automakers could see their profitability in emerging markets — such as Southeast Asia, the Middle East and Latin America — deteriorate. According to global consulting firm PricewaterhouseCoopers (PwC), Korea’s share of the Asean auto market declined from 5.3 percent in 2023 to 5 percent last year, while China’s share rose from 3.4 percent to 5 percent during the same period.

Employees work on the production line at a factory of Chinese electric vehicle (EV) maker Nio in Hefei, Anhui province, China April 2, 2025. [REUTERS/YONHAP]

A laborer works on an assembly line during the organized press tour in the AVATR EV factory in Chongqing, China, May 20, 2025. AVATR Technology is a premium EV (electric vehicle) brand created through a joint venture led by Changan Automobile. [EPA/YONHAP]

“China may look to export its built-up inventory to Europe and emerging markets,” said Cho Chul, a senior researcher at the Korea Institute for Industrial Economics and Trade. “Because export prices for Chinese EVs are often higher than domestic prices, there is plenty of room for price cuts.”

Hyundai Motor’s renewed efforts to reenter the Chinese market are also facing headwinds. In April, Beijing Hyundai — Hyundai’s Chinese joint venture — unveiled a market-specific EV model called the Elexio, aiming to relaunch its presence in the country. The Elexio, which features a design tailored to local preferences, was scheduled to debut as early as the third quarter.

“Competition in China’s EV market is more intense than ever,” said Lee Hang-gu, an adviser at the Korea Automotive Technology Institute. “Even just gaining experience in such a highly competitive environment is meaningful, regardless of profitability.”

In contrast, China’s low-cost EV push is expected to have limited impact in advanced markets such as North America and Europe due to high tariff barriers. In these regions, premium brands like Tesla are seen as the primary competitors to Korean automakers.

The logo of Tesla is seen on a store in Paris, France, Oct. 30, 2020. [REUTERS/YONHAP]

Ironically, a boycott of Tesla triggered by public backlash against CEO Elon Musk has turned into a windfall for Hyundai Motor Group. According to SNE Research, Tesla’s global EV sales from January to April this year fell 13.4 percent year-on-year to 422,000 units, while Hyundai Motor Group’s sales rose 11 percent to 190,000 units.

Experts are calling for Korea to prepare for a more formidable “onslaught” once China completes a restructuring of its bloated EV industry.

“Just as Korea’s auto sector consolidated around a few key players during the financial crisis, China too will see the emergence of mega-firms with annual sales of 5 to 7 million units after restructuring,” said Kwon Yong-joo, a professor of automotive transport design at Kookmin University.

“Korea must accelerate research into electrification, software-defined vehicles [SDVs] and related technologies to effectively compete with these future Chinese giants.”

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.
BY OH SAM-GWON [[email protected]]