Chinese producers of smart electric vehicles (EV) will have to intensify their efforts in the coming quarters to remain on course to reach breakeven as the ferocious price-cutting battle in the world’s biggest auto market appears unlikely to ease.
From Nio to Xpeng and Zeekr, China’s EV newcomers have posted reduced losses in the second quarter, as price cuts have persuaded more customers to swap their fuel-thirsty cars for battery-powered vehicles.
Nio’s second-quarter loss narrowed by 26 per cent from the previous three months to 4.99 billion yuan (US$699 million). Xpeng’s loss fell by two-thirds to 480 million yuan in the same period, while Geely Automobile Holdings’ Zeekr arm cut its loss by 88 per cent to 287 million yuan in the quarter that ended in June.
“The [publicly] listed EV manufacturers need to trim their losses [because] it is tough to secure new funding from investors,” said Ding Haifeng, a consultant at the financial advisory firm Integrity, in Shanghai. “Sustained heavy losses over the coming quarters would endanger some Chinese EV builders, making them likely to be forced out of the highly competitive market.”
To withstand the fierce competition and remain on target to reach breakeven by the fourth quarter, Nio’s CEO William Li requires his 10-year-old firm to deliver 50,000 EVs per month to buyers, twice what the Shanghai-based automaker sold in the second quarter.
“We are targeting to deliver 50,000 cars per month in the fourth quarter,” Li said during a post-earnings briefing on Tuesday. “This is a target our company is resolved to meet.”
See also: Major Automakers Scale Back Electric Vehicle Investments
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