April 18 (Asia Today) — China’s electric vehicle industry, the world’s largest and most advanced, is facing mounting financial strain as fierce competition and overcapacity push many companies toward bankruptcy.

While the sector has expanded rapidly on the back of strong battery manufacturing and artificial intelligence capabilities, analysts warn that structural weaknesses are emerging beneath the surface.

China produced nearly 17 million electric vehicles in 2025, accounting for about 70% of global output. Exports reached roughly 4 million units, giving the country more than 40% of the global market, according to industry estimates.

Leading manufacturer BYD is widely expected to challenge Tesla in both scale and technology, underscoring China’s growing dominance in the sector.

However, the rapid expansion has come at a cost. Over the past several years, about 30 Chinese EV makers have gone bankrupt, reflecting intensifying price wars and oversupply.

Of roughly 120 EV companies currently operating in China, only a small number remain financially stable, while most face significant liquidity risks, industry observers say.

Even major players are under pressure. NIO, often grouped with XPeng and Li Auto as leading startups, reported a net loss of 14.9 billion yuan in 2025, equivalent to about 2.1 billion U.S. dollars. Its cumulative losses over eight years have exceeded 110 billion yuan, or roughly $15.2 billion.

The company also cut more than 10,000 jobs last year as part of restructuring efforts.

Industry-wide debt has climbed to around 3 trillion yuan, or about $415 billion, a level comparable to the gross domestic product of some Southeast Asian economies.

Analysts attribute the financial stress to persistent overproduction and aggressive competition, which have eroded margins and weakened balance sheets.

Despite growing concerns, there have been few signs of coordinated policy measures to address the imbalance. Without structural adjustments, experts warn that bankruptcies could continue to rise across the sector.

— Reported by Asia Today; translated by UPI

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Original Korean report: https://www.asiatoday.co.kr/kn/view.php?key=20260418010005566