China's EV Market Is Imploding

An anonymous reader quotes a report from The Atlantic: In China, you can buy a heavily discounted 'used' electric car that has never, in fact, been used. Chinese automakers, desperate to meet their sales targets in a bitterly competitive market, sell cars to dealerships, which register them as 'sold,' even though no actual customer has bought them. Dealers, stuck with officially sold cars, then offload them as 'used,' often at low prices. The practice has become so prevalent that the Chinese Communist Party is trying to stop it. Its main newspaper, The People's Daily, complained earlier this year that this sales-inflating tactic 'disrupts normal market order,' and criticized companies for their 'data worship.'

This sign of serious problems in China's electric-vehicle industry may come as a surprise to many Americans. The Chinese electric car has become a symbol of the country's seemingly unstoppable rise on the world stage. Many observers point to their growing popularity as evidence that China is winning the race to dominate new technologies. But in China, these electric cars represent something entirely different: the profound threats that Beijing's meddling in markets poses to both China and the world.

Bloated by excessive investment, distorted by government intervention, and plagued by heavy losses, China's EV industry appears destined for a crash. EV companies are locked in a cutthroat struggle for survival. Wei Jianjun, the chairman of the Chinese automaker Great Wall Motor, warned in May that China's car industry could tumble into a financial crisis; it 'just hasn't erupted yet.' To bypass government censorship of bad economic news, market analysts have opted for a seemingly anodyne term to describe the Chinese car industry's downward spiral: involution, which connotes falling in on oneself.

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