Chinese new energy vehicle (NEV) sales have plunged by 50%, leaving a meagre 8 out of 400 companies still standing. Once-valued NEVs, initially priced over 300,000 RMB, now rust away in junkyards. Produced through a Mercedes-Benz and BYD collaboration, these 2019-registered, unused cars, have been abandoned as unsellable scrap. Domestic consumers have outright rejected them, leading to an unprecedented sight of brand-new cars discarded as industrial waste.
A Chinese netizen’s video sheds light on the ongoing decline in China’s electric vehicle (EV) sector and the vast waste of unsold inventory. January 2025 saw NEV sales drop by 50%. Radio Free Asia’s (RFA) recent article, “China’s New Forces in Car Manufacturing Down to Just Eight Companies After a Decade and Billions in Failed Investments,” reports that 2014 marked the inception of China’s new car brands like NIO, Li Auto, and Xpeng. Traditional automaker executives also joined the industry.
By 2019, 60+ car manufacturers emerged, but 400+ companies never made a vehicle. In a decade, China’s 23 new energy firms planned and completed a 13.55 million vehicle annual capacity, investing 685.3 billion RMB. However, 16 companies went bankrupt or had zero sales.
On January 9th, RFA reported in “Neta Auto Stores Closing, Founder Hit with Spending Restrictions” that China’s EV industry is in crisis. Heavily reliant on subsidies and policies, it now faces tariffs from the US and Europe. Domestic EV companies are in brutal price wars. China’s economic downturn and immature technology might lead to a catastrophic collapse of Xi Jinping’s NEV initiative, sparking bankruptcies, unemployment, and potential social unrest.
One of China’s biggest EV failures had an investment exceeding 40 billion RMB. Once second only to BYD in sales, WM Motor’s factories now lie abandoned, with new cars unsold and the boss missing. Owners struggle with insurance and maintenance. The NIO ES8, originally over 600,000 RMB, now barely fetches 100,000 RMB second hand. HiPhi X, once a premium electric car at 700,000 RMB, has slashed prices to 200,000 RMB but remains unwanted. China’s EV illusions are shattered.
Why did China’s electric vehicle industry collapse? The boom, driven by the Chinese Communist Party (CCP), was not market-driven. Government interventions and subsidies distorted the market. Passion alone couldn’t sustain manufacturing. The industry’s rapid growth relied heavily on local government subsidies, including financial support, land, factory facilities, and tax incentives to spur regional economic growth and attract EV manufacturers. This foundation was fundamentally flawed from the start, leading to the bust.
By 2024, international backlash against China’s NEV dumping practices and a severe economic downturn led most EV start-ups to exit the market, leaving only eight major players like BYD and Li Auto. The collapse stemmed from the CCP’s “lane-changing overtaking” strategy. China lagged in traditional auto manufacturing, with key patents and technologies dominated by Western countries, prompting the CCP to pivot to new energy vehicles and electric cars to leapfrog the competition through state-led policies.
The CCP made EVs a national priority, investing heavily, creating detailed policies, and controlling the industry through a centralized economic model. During China’s NEV boom, regions were forced to join, often without resources, causing today’s waste and financial disaster. This issue extends beyond EVs; state-backed initiatives like semiconductor manufacturing and solar panels also suffer from government-driven intervention, leading to failures. This systemic problem is rooted in China’s planned economy.
A significant issue is that many Chinese electric cars have poor technology and serious quality problems, leading to a loss of consumer confidence. Ordinary people save diligently only to be let down. The quality of Chinese EVs is deteriorating. For instance, a domestic EV less than three years old has rusting and flaking undercarriage, even after repainting. The metal crumbles upon touch. No wonder some prefer buying low-end, underpowered electric scooters instead.
The fundamental issue with domestic Chinese cars isn’t the engine, transmission, chassis, motor, battery, or electronic control system, nor their exterior design or features. The core problem is their terrible rust resistance. Reports and complaints about rust problems have been persistent for over a decade. Rusting reveals not only a technical flaw but also cost-cutting measures and a troubling manufacturing attitude. This isn’t just about lacking advanced car-making skills; it’s about treating consumers as test subjects for experimental products.
US economists highlighted the fraud plaguing China’s new energy vehicle industry, causing consumer distrust. While globally known as electric cars, they’re marketed in China as new energy vehicles. From the outset, the Chinese government has engaged in large-scale deception, misleading consumers and rebranding them to deceive the EU and the US in climate negotiations, falsely boosting China’s carbon reduction claims.
China’s NEV industry is in decline, with sales plunging by 50% and only 8 of 400 companies surviving. Once valued NEVs now rust in junkyards, abandoned as unsellable scrap. Domestic consumers have rejected these 2019-registered, unused cars. The industry’s reliance on subsidies and government intervention has led to vast waste and financial disaster.