GM CEO Warns of China EV 'Overcapacity' as Price War Intensifies
Mary Barra's comments underscore a brutal battle for market share in the world's largest auto market, where Tesla sales have slipped and local rivals are surging.
General Motors CEO Mary Barra has sounded the alarm on the fierce competition in China's electric vehicle market, warning of significant 'overcapacity' that is fueling an intense price war and squeezing profitability for global automakers.
The comments highlight a growing challenge for international brands in a market where more than 100 domestic manufacturers are battling for dominance. This hyper-competitive environment is creating a sharp divergence in fortunes. While overall sales of new energy vehicles (NEVs) in China are booming, the gains are increasingly captured by local players at the expense of established foreign companies, including Tesla.
China's NEV market has become a brutal battleground. According to an analysis by Caixin Global, the oversupply has led to carmakers front-loading the price war with aggressively low launch prices for new models in a desperate bid to capture market share. This strategy, while potentially accelerating EV adoption, is seen by executives like Barra as unsustainable.
The pressure is evident in recent sales data. While the Chinese market for NEVs hit a record 1.6 million units in September, Tesla saw its China-made vehicle deliveries fall by nearly 1% year-over-year to 71,525 units, following a 9.9% annual decline in August. Even the domestic market leader, BYD, saw its global passenger vehicle sales dip 5.9% year-over-year in September.
In stark contrast, several local competitors posted staggering growth. XPeng's deliveries in September surged 94.7% from the previous year, while NIO and Leapmotor recorded annual growth of 64.1% and 97.4%, respectively. This rapid ascent of domestic brands underscores the immense difficulty foreign automakers face in maintaining their foothold.
For General Motors, which has operated in China for decades, the landscape has become increasingly difficult. The company and its joint ventures delivered 480,000 vehicles in the third quarter, a decline of 10.7% from the same period a year ago, reflecting the intense pressure from both domestic EV startups and established players.
The price war at home is also fueling a global push. With domestic margins under assault, Chinese automakers are increasingly looking to international markets to sustain growth. China's NEV exports doubled in September compared to the previous year, a trend that threatens to bring the same competitive intensity to markets in Europe and Southeast Asia.
Analysts remain cautious about the near-term outlook. Despite the record sales volumes, commentary from firms like Nomura suggests the market has not yet bottomed out in terms of fierce competition. As Barra's comments suggest, the industry is bracing for a period of consolidation where only the most resilient and cost-efficient players will survive.