
Stephen Jen unpacks the brutal EV price war currently raging in China, where market share is everything. Back in 2019, there were over 500 EV manufacturers; now, estimates suggest that only 100–300 remain—and this number is expected to shrink even further as price wars intensify.
Chinese EV champion BYD has slashed prices by 30% on some models, sparking a Darwinian battle that will likely see many smaller, cashflow-negative competitors exit the market. Meanwhile, German carmakers have been forced to offer 20% discounts just to maintain sales volume in China.
Jen also highlights a key asymmetry: BYD’s EVs sell for three times more in Europe than in China—giving them significant scope to undercut global competitors in the future. The same pattern is evident for Japanese brands, whose US prices are double their China prices. This price gap is a strategic weapon that could be unleashed in Europe and the US, should Chinese firms choose to escalate the fight.
Beyond autos, Jen points to broader deflationary forces stemming from Asia’s manufacturing cost advantages and the unstoppable march of AI and robotics—both of which are set to weigh on global inflation trends.
Key Quote
“When Chinese companies focus on a challenge, they run as fast as possible and turn the dial-up to 11. They are also hyper-competitive with each other. This is indeed the case in the EV sector.”
Table of Contents
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A brutal Darwinian process
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German car makers in China
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Foreign vs. domestic car prices
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Deflationary pressures
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