Only Five Chinese Automakers Will Survive by 2030: Xpeng CEO

China’s electric vehicle (EV) market, the world’s largest, is undergoing a phase of consolidation that could reduce the number of viable automakers dramatically in the coming years. He Xiaopeng, CEO of Xpeng, says the industry has entered “an elimination cycle” and predicts that “only five Chinese manufacturers will remain in five years.”

The warning comes as more than 150 car brands compete in China, with many struggling to generate profits. He argued that no company, including the largest players, is immune. “No Chinese manufacturer is safe from this elimination round,” he said during a recent podcast. He added that while some automakers report large revenues, many of these include joint ventures with foreign brands. “Selling a car for CN¥60,000 to CN¥70,000 and earning only CN¥1,000 is equivalent to selling scrap,” he noted.

Industry observers share similar concerns. Consultancy AlixPartners forecasts that only 15 of the 129 EV and plug-in hybrid brands currently in China will be financially viable by 2030. These surviving companies are expected to command around 75% of the market, each averaging over 1 million annual sales. 

“China is one of the most competitive new energy vehicle markets in the world, with intense price wars, rapid innovation, and new entrants constantly raising the bar. This environment has driven advances in technology and cost efficiency, but it has also left many companies struggling to achieve sustainable profitability,” says Stephen Dyer, Director of Automotive Practice, AlixPartners.

Price wars have already reshaped the industry. In the past two years, automakers in China have steadily lowered prices to maintain demand, which has led to eroded profit margins and rising inventories. Dealers have been forced to self-register vehicles as sold to meet sales targets, adding further strain. Only one in five manufacturers currently turns a profit, according to analysts. Even BYD, the world’s largest producer of plug-in vehicles, has reported weaker-than-expected earnings due to pricing pressure.

The industry has already seen casualties. Companies such as Byton, Jiyue, and HiPhi have disappeared, while Aiways declared bankruptcy and shifted its focus exclusively to Europe with limited success. Market observers expect further bankruptcies, mergers, and brand eliminations as competition intensifies.

The Chinese government has acknowledged the risks of unchecked competition, with regulators calling for automakers to halt the price war. However, analysts expect price competition to persist in indirect forms such as insurance subsidies and zero-interest financing. Capacity utilization in Chinese auto plants dropped to an average of 50% in 2023, the lowest in a decade, putting further pressure on profitability.

For brands that aim to survive, analysts highlight three critical factors: manufacturing capacity, international scale, and leadership in battery technology. He Xiaopeng agreed that survival will depend on scale, drawing parallels to the solar panel industry, which also saw mass consolidation after rapid expansion and a fierce price war.

The consolidation trend is not unique to China. Mercedes-Benz CEO Ola Källenius previously described the global auto industry as a “Darwinian price war,” predicting that many players will vanish in the next five years.