In mainland China, electric vehicles now account for over half of new car sales. However, the earnings outlook for most Chinese EV manufacturers remains grim due to intense price competition. Only two home-grown companies, BYD and Li Auto, are profitable, leaving around 30 other rivals under pressure to stem losses despite optimistic sales forecasts in the world's largest automotive market.

The three EV manufacturers that have recently reported second-quarter earnings—Xpeng, Zeekr Intelligent Technology, and Leapmotor—combined for a loss of 42.9 billion yuan (US$6 billion). Although this represents a 20% improvement from the previous year's loss of 53.5 billion yuan, concerns persist that further discounts could cripple the industry.

The EV penetration rate in mainland China exceeded 50% for the first time in July, driven by government incentives and expanding charging infrastructure. However, the fierce price war continues to strain manufacturers. Smartphone vendor Xiaomi, which entered the EV market successfully, acknowledges that profitability will take time due to substantial research, development, and marketing costs.

In summary, Chinese EV makers face significant challenges despite rising sales, with mounting losses and overseas price wars adding to the pressure. The industry's survival hinges on navigating this cutthroat competition while striving for profitability.