US Mirrors China As Electric-Vehicle Bubble Starts To Deflate: WSJ

The U.S. is mirroring China’s EV crisis where surges in production have led to an oversaturated market, according to an op-ed by Wall Street Journal.

Auto manufacturers in China are bleeding cash and facing bankruptcy due to a relentless price war. Over the past decade, numerous Chinese EV startups have emerged, bolstered by government incentives including consumer benefits and direct financing. However, with the government reducing subsidies and increasing production requirements, nearly 400 Chinese EV manufacturers have gone under in recent years.

With EVs making up a third of auto sales in China, but supply significantly outstripping demand, the situation is likely to worsen as Chinese consumption weakens.

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A similar trend is becoming visible in the U.S. Cox Automotive reported this month that EV inventory in the U.S. had ballooned to 103 days of supply, almost double that of gas-powered cars. Consequently, auto manufacturers and dealers are selling their growing stock at slashed prices, leading to a 20% drop in the average EV price to $53,438.

Traditional auto manufacturers will likely need to increase the prices of gas-powered cars to offset their EV losses. Meanwhile, EV startups are struggling as interest rates rise and they battle to scale up manufacturing.

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