about 2 months ago • 2 mins
What’s going on here?
Only a third of Chinese carmakers hit their sales target last year, as the world’s biggest car market filled to the brim with competition.
What does this mean?
Sales of EVs and hybrid cars were 38% higher last year than the one before, with China’s Passenger Car Association reporting a figure just shy of 9 million on Wednesday. But clearly, Chinese carmakers had bigger plans. Of the thirteen brands that made their sales figures public, just four hit their targets. The ones that churn out traditional gas guzzlers fell particularly behind, with only Geely Automobile living up to its own projections. Mind you, electric carmaker BYD stole the focus from any failures, meeting its ambitious target to dethrone Tesla as the world’s top-selling EV maker.
Why should I care?
For markets: Vacations can be expensive.
China’s appetite for EVs is sending a rumble through the car market. But the problem is that electric carmakers are hustling to satiate those buyers, adding more competition to an already crowded market. So for brands that missed the chance to establish themselves as household names in the early days, the most lucrative move could be to funnel EVs into foreign markets. Russia, for example. The only problem: China gives its carmakers hefty tax breaks and subsidies, so they’ll need to watch their books carefully if they expand into less generous areas.
The bigger picture: Carmakers sneeze, and chipmakers catch a cold.
Carmakers stocked up big-time on the chips they need to run fancy gizmos and gadgets, anticipating more sales than they won in the end. So with inventories nice and fat, chipmakers aren’t having much luck flogging their wares. Mobileye – which makes chips for driver-assistance systems and counts Porsche and Volkswagen as customers – recently unveiled a disappointing full-year revenue forecast. And because that made investors wary of future business from carmakers, they sent Mobileye’s shares down by a quarter on Thursday.
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