Day: October 26, 2025

• Dan Wang lived in China from 2017 to 2023 while covering the country as a technology analyst.
• He published his first book, “Breakneck: China’s Quest to Engineer the Future,” in August.
• Wang told Business Insider that China’s industrial successes were driven by “brutal competition.”

China’s EV market is saturated with way too many car company founders who are deadlocked in a brutal battle for market share, says China analyst Dan Wang.

Wang lived in China from 2017 to 2023, where he covered the country as a technology analyst for Gavekal Dragonomics, a financial services company.

He is now a research fellow at Stanford University’s Hoover Institution. Wang published his first book, “Breakneck: China’s Quest to Engineer the Future,” in August.

Wang said the EV price war in the country won’t stop anytime soon, and that’s by design.

“There are too many entrepreneurs, too many engineers, and too much desire for local governments to support local champions,” he said.

“Brutal competition has produced many of China’s successes, for example, in solar and electric vehicles. It is also a reason for many of these industries to have low profits,” he added.

Wang wrote in “Breakneck” that government support was a key reason Chinese tech giants like Huawei and Xiaomi ventured into the automotive business.

“This sort of expansion is driven both by the fiercely competitive market environments and by government subsidies that make it easier for companies to try their hand at making new products,” he wrote.

“They allow companies to unleash a flood of undifferentiated products, ruthlessly underbid each other, and pray their competitors run out of money before they do,” he added.

That race to the bottom is starting to show up in EV companies’ bottom lines.

In August, BYD said its net profit in the second quarter fell by 30% from a year earlier.

BYD said in its earnings report that “short-term profitability” had been pulled down by “excessive marketing” and discounting. In May, BYD said it was slashing prices on 22 electric and hybrid models until the end of June.

“Competition in China is cutthroat, and it’s hard for that situation to change,” Wang told Business Insider.

“That’s partly a function of the giant scale of China’s market, in which entrepreneurs are always daring to pursue opportunities, which is a feature of China’s highly dynamic ecosystem,” he added.

Hundreds of billions in subsidies — at least

Last year, the US’s Center for Strategic & International Studies said in a report that China’s government had spent at least $230 billion since 2009 supporting local EV champions such as BYD. The think tank said the figure was probably an underestimate, since it did not include incentives and subsidies from regional governments.

Rivian CEO RJ Scaringe told the “Everything Electric” podcast in an episode that aired in September that China’s EVs are cheaper because of the country’s generous subsidies and lower labor costs.

“There’s not something magical when you take it apart that’s allowing these really impressive cost structures,” Scaringe said. “There’s no secret magic thing that you’re like, ‘Oh, aha, they did this.’ But rather it’s the compounding benefits of a lower cost of capital.”

But not everybody has said that China’s EV market will remain as hotly contested in the years to come.

In December, Xpeng CEO He Xiaopeng told his staff that the auto industry would experience an “elimination round” from 2025 to 2027, per an internal letter obtained by The Wall Street Journal.

The Xpeng founder said in a November interview with Singaporean newspaper The Straits Times that most Chinese automakers won’t survive past the next decade.

“I personally think that there will only be seven major car companies that will exist in the coming 10 years,” he said, without naming specific companies.