Most electric vehicle startups in China fell short of their midyear sales goals, despite new energy vehicles making up over 60% of new car sales in the country for three straight months in the first half of the year. Rising costs and a sluggish auto market have dampened their ambitious growth plans.
Zeekr stood out as an exception, nearly doubling its sales in the first six months compared to the previous year, reaching 178,370 units, according to research. This represents about 59.5% of the company’s full-year target of 300,000 vehicles.
However, other companies faced tougher challenges. Nio only achieved 41.9% of its annual sales goal, even though shipments increased by 67.4% in the first half from the same period last year to 191,123 vehicles. The Shanghai-based firm had aimed for annual sales growth between 40% and 50%.
Leapmotor Technology reported a 60.8% rise in deliveries in the first half, with 356,487 units shipped, but this was only 35.6% of its bold full-year target of one million vehicles. Similarly, companies like Li Auto, Xiaomi Auto, Xpeng, Deepal, Aito, and IM Motors managed to reach just 30% to 40% of their annual sales targets.
The weakest performance came from Avatr, which is backed by Changan Automobile. Its sales declined sharply by 53.5%, totaling only 27,619 vehicles, just 15.9% of its full-year goal.
Experts say the lackluster sales progress largely mirrors broader weakness across China’s auto market. Retail sales of passenger vehicles fell 20.2% in the first half compared to last year, totaling 8.7 million units, according to the China Passenger Car Association. This shrinking market has made it difficult for EV startups to hit the aggressive targets they set earlier this year.
Rising prices of key materials have also hampered automakers’ ability to stimulate demand with discounts. Memory chip prices have nearly quintupled to nearly CNY100 (about USD14.70) per chip, according to industry sources. Lithium carbonate prices have surged 125%, reaching CNY180,000 (around USD26,539) per ton. Consequently, the average production cost for each Aito vehicle has increased by approximately CNY15,000 to CNY20,000.
Nio’s founder mentioned that higher raw material costs have increased the production cost of the ES8 by around CNY20,000 (USD2,950) per vehicle. To preserve its profit margins, the company would need to raise the vehicle’s price by roughly CNY30,000. Instead, Nio has chosen to absorb the extra costs rather than passing them on to buyers.
Leapmotor has responded by designing vehicles on a common platform and increasing in-house production of key components to offset rising procurement costs. Major automakers like Tesla, Li Auto, and industry alliances have also diversified their battery supplier base to better manage vehicle costs.
Starting January 1 next year, China will eliminate several vehicle and vessel tax incentives, including a 50% reduction on taxes for energy-efficient vehicles and exemptions for pure electric commercial vehicles, plug-in hybrids, including extended-range models, and fuel-cell commercial vehicles. Analysts suggest these policy changes could further boost the market share of pure electric cars.