Tesla's Chinese Rival BYD May Lose Market Dominance As China's Dongfeng And Changan Mull Merger: Report

Chinese state-owned car manufacturers Dongfeng Motor Group and Chongqing Changan Automobile are contemplating a merger that could surpass EV giant BYD Co. BYDYY BYDDF in terms of market dominance.

What Happened: On Monday, both Dongfeng and Changan revealed in exchange filings that their controlling shareholders are considering asset deals that could change their ownership structures reported the South China Morning Post. The specifics of these potential deals were not disclosed.

Loyal Wealth Management’s Fund Manager in Shanghai, Ivan Li, suggested that “the announcements hint at a possible merger of the state-backed parents, although they did not explicitly confirm it.” He also noted that the Chinese government has a vested interest in promoting consolidation in the automotive sector due to the high level of competition.

In 2024, Dongfeng sold 2.48 million vehicles, while Changan sold 2.68 million, delivering a total of 5.16 million vehicles in sales, compared to BYD’s sales of 4.27 million electric vehicles.

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Why It Matters: This potential merger comes at a time when Chinese automakers are aggressively expanding their operations. Last week, BYD announced plans to hire an additional 20,000 workers in Zhengzhou to boost production capacity. Similarly, Changan unveiled its "Dubhe Plan 2.0," promising to launch 35 intelligent vehicle models in the next three years.

As reported, the proposed merger between Dongfeng and Changan could result in one of the world’s largest auto groups. This consolidation could significantly alter the competitive landscape of China’s auto industry and have far-reaching implications for the global automotive market. A newly formed entity overseeing both Dongfeng Motor and Changan Automobile would become China's top carmaker by sales, surpassing BYD, the world's leading EV manufacturer.

Meanwhile, BYD outshined Tesla in terms of EV registrations in January in the UK.  Society of Motor Manufacturers and Traders (SMMT) reported that while Elon Musk‘s Tesla saw a 7.79% decline in registered EVs, BYD reported a 551% surge in its EV registrations for January.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.