EV sales defy China’s consumer spending slump

Going strong: XPeng Inc EVs on display during an event in Hong Kong. The company saw sales growth of 35% for May in China. — Bloomberg

SHANGHAI: Electric vehicles (EVs) remain a bright spot in China’s auto market as manufacturers of battery-powered cars overcame a slump in consumer spending at home thanks to price cuts and new model launches.

The leading manufacturers, from BYD Co to Nio Inc, all reported strong sales growth in May. Seres Group Co, which works with Huawei Technologies Co to make the popular Aito EV, saw the biggest increase by delivering 34,100 cars, almost triple the amount from the same time last year.

Nio reported a 234% increase in units sold, while Zeekr Intelligent Technology Holding Ltd saw sales more than double.

BYD, the country’s best-selling brand, sold 330,488 passenger vehicles in May, an increase of just over a quarter compared with last year.

Two other EV makers also saw sales growth, with Xpeng Inc posting a 35% increase and Li Auto Inc seeing deliveries rise 24% in May.

The figures buoyed shares, with automakers leading the gains in Hong Kong. BYD shares rose as much as 6.1% as of yesterday. Nio shares in Singapore gained as much as 5.1%. Li Auto rose 5.25% and Xpeng saw a 1.7% gain.

The continued growth comes as Chinese EV producers face mounting challenges at home and abroad. Chinese consumers reined in spending on things from clothes to office supplies to autos in April.

With the slowing demand for battery-powered vehicles driving up competition, EV makers are discounting and speeding up the launch of new models.

BYD intensified the price war by cutting the prices of many popular models in February which led others to follow.

Meanwhile, access to new overseas markets where manufacturers can charge higher prices is being threatened by trade actions such as potential tariff hikes in the European Union, and in the United States, which imposed an import tax of more than 100% on Chinese EVs.

Still, sales at home are seen offering some comfort with EVs and plug-in hybrids expected to grow 33% to 770,000 vehicles in May against a decline of 5.3% for overall deliveries including petrol cars, preliminary data from the China Passenger Car Association show.

The decline is likely due to the week-long Labour Day holiday falling entirely within May this year, the association noted. — Bloomberg