Fitch： Consumers are accelerating to turn to smart driving. Competition in China’s auto market will intensify in 2024.

Viewpoint Network News: Recently, Fitch said in its latest report that China’s traditional automobile manufacturers (mainly state-owned enterprises (SOEs)) are adopting the technologies of domestic technology giants and electric vehicle (EV) companies, which will increase the uncertainty of competition in the electric vehicle market in China in 2024 and beyond.

Fitch believes that the unexpectedly strong market demand for Huawei AITO electric SUV in the fourth quarter of 2023 indicates that consumers in China are accelerating their shift to intelligent driving. In the second half of 2023, several Chinese-funded electric vehicle companies and suppliers launched high-level intelligent driving navigation assistance systems in urban areas based on expressway solutions. It is expected that more car companies will enter the market in 2024.

Data show that in 2023, BYD led the domestic electric vehicle market in China with a market share of 35%, followed by Tesla China, GAC AION and Geely with market shares of 7.8%, 6.3% and 6.1% respectively.

At the beginning of 2024, due to the depressed consumer demand, electric vehicle manufacturers began a new round of price reduction. Previously, the automobile market in China experienced a year of fierce price competition, and the retail discount of internal combustion engine vehicles reached a new high at the end of 2023.

Fitch predicts that automakers will ease the pressure on profit margins by further reducing costs in 2024, especially after the price of lithium carbonate fell by more than 40% to about 100,000 yuan/ton at the end of 2023. Sharing investment in R&D in autonomous driving and asset-intensive ecosystem services (such as battery charging and switching stations) may also help to improve the profitability of electric vehicles and ease the intensity of capital expenditure.

In 2023, the domestic retail sales of electric vehicles in China increased by 37%, and the share of electric vehicles in the total delivery of retail vehicles further increased from 28% in 2022 to 36%. At the same time, although exports to Europe decreased in the fourth quarter of 2023 due to slow demand and high base, China’s electric vehicle exports still showed a strong surge of 73%.

Previously, Fitch said in a research report that under the background of economic uncertainty, the domestic demand for passenger cars in China will increase slightly to nearly 22 million in 2024. However, driven by the aggressive pricing of electric vehicle manufacturers and consumers’ increasing preference for electric vehicles, the market share of electric vehicles may further increase from about 35% in 2023 to 42%-45%.

This article comes from: Viewpoint. com