Even the world's biggest electric-vehicle market is slowing

Chinese electric-vehicle makers that enjoyed years of explosive growth now face a slowdown in domestic demand, spurring them to push overseas and challenge global auto giants already struggling with a transition to battery-powered cars.

- Selina Cheng

A subsidies-driven boom in past years helped China sell more electric cars than Europe and the U.S. combined. The sales surge created a wave of investment into homegrown automakers that have become the envy of the global industry.

A deceleration in the China market, after subsidies were reduced and consumers cut back spending, means the growth rate there has fallen behind those two regions.

The slowdown has fueled a fierce price war in China embroiling dozens of EV startups and foreign players such as Tesla. Many Chinese EV makers burned through cash to chase a share of the growing market. Many are yet to turn a profit despite rising sales, leaving some at risk of going bust or needing injections of capital.

Slower growth also leaves an industry geared up to make millions more cars than it can sell domestically in the next few years. China's government has acknowledged overcapacity and underused factories, and is pushing automakers to expand overseas. Analysts say that trend could lead to oversupply at home and abroad.

Automakers in China are projected to add capacity for five million cars between 2023 and 2025, most of which are EVs, according to an estimate by Bernstein Research. EV sales in China are expected to grow by around 3.7 million during this period, it said.

BYD, the crown jewel among Chinese carmakers that is backed by Warren Buffett, added enough factory capacity in China alone by December to churn out four million cars a year, Bernstein said. That figure is a million more than it sold in 2023.

Global ambitions BYD, which has ousted Tesla as the top global EV seller, has ambitious plans to increase sales overseas in the coming years, including buying ships to transport cars to Europe.