China’s electric vehicle market, once celebrated as a beacon of the country’s technological and industrial ambition, has now reached a point of intense saturation. According to China analyst Dan Wang, the sector is overwhelmed by an extraordinary number of company founders and entrepreneurial teams locked in an uncompromising struggle for dominance. This merciless competition, he observes, has created a marketplace where every firm is striving not merely to survive but to seize a fragment of the rapidly growing share of electric mobility in the world’s largest auto market. The resulting rivalry, while propelling innovation, has also introduced turbulence and financial strain that threaten the very players driving the revolution.
Wang brings a deeply informed perspective to this analysis. Having lived in China from 2017 through 2023, he served as a technology analyst with Gavekal Dragonomics, a firm specializing in financial and economic research. During those years, he closely examined the evolving intersection of Chinese industry, government policy, and technological advancement. Today, Wang is a research fellow at Stanford University’s Hoover Institution, a role that allows him to integrate his firsthand experience into broader academic and policy discussions. His recently published book, *Breakneck: China’s Quest to Engineer the Future*, released in August, delves into the country’s remarkable drive to achieve technological leadership—even at extraordinary social, financial, and competitive costs.
In discussing the electric vehicle price war currently unfolding across China, Wang emphasizes that its relentless pace is neither accidental nor short-lived. It is, in his words, “by design.” The structural foundations of the Chinese EV ecosystem—an overabundance of entrepreneurs and engineers, coupled with a powerful ethos of local government support for homegrown champions—ensure that this hypercompetitive environment will likely persist for the foreseeable future. He notes that this fiercely Darwinian dynamic has historically been one of China’s greatest strengths: brutally competitive markets have catalyzed world-class innovation in industries such as solar energy and electric mobility. Yet, as Wang also points out, the same forces that create global leaders often suffocate profitability, leaving behind a wake of underperforming or bankrupt firms.
In *Breakneck*, Wang elaborates that extensive government intervention has played a decisive role in shaping these patterns. Generous subsidies and policy incentives have encouraged China’s major technology corporations—including firms like Huawei and Xiaomi—to expand aggressively into the automotive sphere. Such diversification, he argues, is driven both by the unforgiving intensity of market competition and by the ample financial safety net that allows companies to experiment with new products. The combination of subsidies and industrial zeal has produced a flood of largely indistinguishable vehicles, whose manufacturers compete primarily through price rather than technological differentiation. This has resulted in a kind of survival contest where firms engage in relentless underbidding, hoping that their rivals will capitulate or exhaust their financial resources first.
This unsustainable “race to the bottom” has begun to manifest in corporate earnings. BYD, one of China’s most successful and internationally recognized EV producers, disclosed in August that its net profit had fallen by 30% in the second quarter compared with the previous year. In its official earnings report, the company attributed the decline in “short-term profitability” to the twin pressures of excessive marketing expenditures and aggressive discounting. Indeed, earlier in May, BYD announced that it would temporarily slash prices across 22 models of its electric and hybrid vehicles—a move emblematic of the cost-driven warfare pervading the market.
Wang told *Business Insider* that in China, competition in the automotive sector is not merely fierce but structurally “cutthroat.” He underscored that such intensity stems partly from the vast scale of China’s domestic market, where countless entrepreneurs persistently chase opportunity. This ceaseless dynamism, a hallmark of China’s broader industrial ecosystem, fuels constant reinvention but simultaneously ensures that consolidation and long-term stability remain difficult to achieve.
The magnitude of government support further amplifies these market distortions. A report produced by the U.S.-based Center for Strategic and International Studies revealed that since 2009, China’s central authorities have allocated at least $230 billion in aid to fortify local EV leaders, among them BYD. Yet even this staggering figure likely underestimates total spending, as provincial and municipal governments have poured in additional incentives, grants, and soft loans to nurture their regional automotive champions.
Industry observers outside China have also noted the influence of subsidies and underlying cost advantages. Rivian CEO R.J. Scaringe explained on the *Everything Electric* podcast that the affordability of Chinese EVs can be attributed not to any mysterious production breakthrough but rather to tangible factors such as lower labor expenses, more accessible financing, and sustained public investment. According to Scaringe, the “impressive cost structures” of Chinese vehicles arise from cumulative economic advantages rather than from technological secrets hidden within their engineering.
Nevertheless, not everyone believes that the current intensity of China’s EV competition will endure indefinitely. In an internal letter obtained by *The Wall Street Journal*, Xpeng CEO He Xiaopeng warned employees that between 2025 and 2027 the Chinese auto industry could enter an “elimination round,” during which weaker companies will be forced out of the market. In a subsequent interview with *The Straits Times*, He predicted that within the next decade, the sector would consolidate dramatically, leaving perhaps only seven major car manufacturers still standing. Though he refrained from naming specific survivors, his forecast underscores a growing consensus within the industry: that China’s electrified auto boom, driven by ambition and subsidy, may soon face a reckoning that determines which innovators can withstand the pressures of a hypercompetitive ecosystem and which will succumb to it.
Sourse: https://www.businessinsider.com/top-china-watcher-ev-market-too-many-entrepreneurs-engineers-2025-9
