NO WAY OUT! Chinese EV Makers Ready to Fabricate Reports Just to Survive!

NO WAY OUT! Chinese EV Makers Ready to Fabricate Reports Just to Survive!
Hey everyone, welcome back to the channel! Today, we’re diving into the chaos unfolding in China’s electric vehicle (EV) industry. While Chinese officials insist that everything is going smoothly, the reality on the ground paints a much different picture. With new tariffs being imposed in the U.S. and Europe, and domestic challenges piling up, China’s once-booming EV sector is hitting a major roadblock. In this video, we’ll cover five key reasons why the Chinese EV industry is in crisis and how it’s struggling to stay afloat. Let’s get started!
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Li Auto Lied to Investors About Vehicle Demand
First on our list is Li Auto, one of the most promising EV makers in China. With advanced technology, strong manufacturing infrastructure, and an ambitious business plan, Li Auto attracted a significant number of investors, including many from the U.S. But now, those investors feel betrayed, with losses mounting as Li Auto’s latest project, the Li Mega, falls far short of expectations.
The Li Mega, a futuristic luxury van, was billed as the next big thing for the company. It featured impressive autonomy-boasting a range of over 700 kilometers (or 435 miles)-and was expected to dominate the market in the $75,000+ segment. But there was one big problem: customers weren’t interested. Consumers have increasingly been opting for SUVs and crossovers, leaving Li Mega with significantly lower demand than projected.
Here’s where things get even more concerning. To attract more investor capital, Li Auto overstated the number of orders they received. The company claimed over 100,000 pre-orders, but by the end of the first quarter of 2024, deliveries were between just 76,000 and 78,000. This massive gap led to a 22% shortfall in expected sales, and now U.S. investors have filed a class-action lawsuit, accusing Li Auto of securities fraud.
The lawsuit claims that Li Auto misled investors about both vehicle demand and the effectiveness of its operating strategy. With investors now pulling back and confidence in the company shattered, Li Auto’s troubles are far from over.
BYD’s Sales and Profits Are Plummeting
Next up is BYD, China’s largest EV manufacturer and the world’s second-largest. Despite its dominant position in the market, BYD is facing serious financial difficulties. Like many other Chinese companies, BYD has been relying on exaggerated sales reports to attract investors, but the truth is starting to come out.
In the last quarter of 2023, BYD boasted that it had outperformed Tesla in global sales. But in the first quarter of 2024, sales dropped sharply, falling to just 300,000 vehicles-a significant decline from the 526,000 units sold in the previous quarter.
This is particularly troubling because BYD started a price war in China, slashing prices to maintain market share. As a result, the company’s profit margins have plummeted. BYD’s profit for the first quarter of 2024 was just $630 million, a 47% drop compared to the previous quarter.
The situation is made worse by BYD’s reliance on the domestic Chinese market, which accounts for 95% of its sales. Expansion into Western markets now seems highly unlikely, as the U.S. recently imposed a 100% tariff on Chinese-made EVs, and Europe is exploring similar protective measures to safeguard its own auto industry. With these barriers in place, BYD’s chances of international expansion are slim, and its prospects in China aren’t looking much better.
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Chinese EV Makers Aren’t Growing Anymore
One of the most alarming trends we’re seeing in China’s EV industry is stagnation among major players. Companies like NIO, once hailed as the next big thing in the EV world, are now struggling to grow. In fact, NIO recently revised its sales projections, lowering its expected deliveries for the first quarter of 2024 from 33,000 vehicles to 30,000. But even this reduced target wasn’t met, as actual deliveries fell short.
To put things in perspective, NIO delivered over 31,000 vehicles in the first quarter of 2023. A year later, the company is delivering fewer cars despite massive price cuts, which haven’t helped boost demand. In fact, the first quarter of 2024 marked a significant drop from the 50,000 vehicles delivered in the final quarter of 2023.
This stagnation is reflected in NIO’s share value as well. The company’s stock has been in freefall, with American Depositary Receipts (ADRs) losing 43% of their value over the past 12 months. Investors who once saw NIO as a bright spot in China’s EV sector are now bracing for more losses.
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