China’s EV boom is starting to look like Evergrande on wheels
A brutal reality is emerging. Chinese automakers are winning overseas orders by slashing prices below domestic levels, sometimes even selling at a loss. Profit margins have collapsed to just 2.9%, far below the industrial average.
This is classic overcapacity. Production exploded, factories multiplied, and subsidies fueled a frenzy. But domestic demand is already saturated, inventories are piling up, and exports have become the only pressure valve keeping the system from cracking.
If this sounds familiar, it should. China’s property sector followed the exact same playbook before it collapsed. Too much supply, weakening demand, and endless attempts to delay the inevitable through policy support.
Now the risks are even bigger. Autos sit at the center of a massive industrial chain, supporting millions of jobs. If this bubble breaks, it won’t stay contained. It will ripple across banks, factories, and the entire economy.