The earnings outlook for Chinese electric vehicle makers remains uncertain, as margins continue to shrink amid fierce price competition in the world’s largest auto market, according to JPMorgan Chase.
According to a recent report from the US investment bank, Chinese automakers offered record-high average discounts of 16.8% last month to maintain sales growth. The corresponding figure in March 2025 was 16.3%. JPMorgan has been tracking biweekly price changes in China since 2017. The average discount in 2024 is 8.3%, according to the China Passenger Car Association (CPCA).
The findings add to pessimism about the financial performance of Chinese automakers this year, with most yet to turn a profit. “Prices reflect the balance between supply and demand,” said Nick Lai, head of auto research for Asia-Pacific at JPMorgan. “Price competition has become more intense this year. Unfortunately, we have not seen a surge in demand for electric vehicles.”
Data from a JPMorgan report suggests there is no end in sight to the fierce price war in China’s auto market, despite growing calls from Beijing and industry officials to abandon this form of destructive competition. The models tracked by JPMorgan include both gasoline and electric vehicles. All pure electric vehicles saw an average price cut of 10% by December 2024, according to the CPCA. Such deep discounts are rare in the domestic market, said Cui Dongshu, secretary general of the CPCA.
Of the more than 50 EV makers in China, only three are known to be profitable: BYD (the world’s largest EV maker), Li Auto (Tesla’s closest competitor in China), and Seres (maker of the Aito smart car brand). Other EV companies are saddled with high development and marketing costs, making it difficult for them to achieve large profit margins and ensure stable profits.
Profit margins per vehicle are the difference between the selling price and tangible costs such as raw materials, labor and import and export. Profit margins for most Chinese EV makers are expected to fall to around 10% by 2024, from around 20% four years ago, according to Phate Zhang, founder of Shanghai-based EV data provider CnEVPost.
“Almost all companies are victims of price wars,” said Mr. Zhang. “But if any company chooses to withdraw from the price war, its sales will decline, making it even more difficult to generate net profits.”
By the end of 2024, China’s four largest listed premium EV makers—Nio, Xpeng, Geely-backed Zeekr and Stellantis-backed Leapmotor—have each announced plans to cut losses amid fierce competition. Analysts expect smaller players to be forced out of the market or acquired by larger rivals within the next two years.
JPMorgan’s Lai said robust exports would boost profits for Chinese electric carmakers because their vehicles have higher margins overseas. “Exported vehicles make most companies good profits,” he said. “The lucrative overseas sales give them the opportunity to chase higher profits.”
In the first four months of 2025, China's electric vehicles accounted for 33% of the country's total vehicle exports, up from about 25% in the previous two years, Lai said. In April 2025, pure electric vehicles and plug-in hybrid vehicles (PHEVs) made in China accounted for 38% of the mainland's vehicle exports. In addition, electric vehicles accounted for 43% of total vehicle sales in China from January to April this year, compared with 41% in the same period last year, according to the JPMorgan report. The report also forecasts that Chinese electric vehicles will account for 80% of the domestic auto market by 2030.
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