As Tesla’s Shanghai Gigafactory produced 3 million vehicles in less than five years, Chinese new energy vehicle (NEV) manufacturers fell into collective silence. Soon after, the globally launched new Model Y in China ignited heated discussions, receiving over 50,000 orders on its first day—surpassing the monthly sales of most NEV models in 2024.
Nicknamed the “catalyst” in the industry, Tesla has dominated the global market with just the Model 3 and Model Y, while domestic NEV startups have been stuck in an endless cycle of launching new models every month and engaging in quarterly price wars.
Data shows that NEV penetration reached 47.6% in 2024. However, behind this disruptor’s celebration lies an undercurrent of challenges. The entire industry is undergoing a baptism of fire and ice.
Is the rapid rise of NEVs a blessing for the industry or a catastrophe for the market?
I. Iteration Anxiety: Your Beloved Car is Rapidly Depreciating
“Your car is outdated the moment you buy it” has become a painful reality for NEV owners. One customer shared their experience online: they purchased a flagship model in March 2024, only to see an upgraded version with LiDAR released in July, causing their car’s resale value to plummet by 30%. This will likely be the new norm in the 2025 NEV market.
While fuel cars have a stable product cycle of 5-7 years, NEVs are reshaping industry perceptions with smartphone-like iteration speeds. This “technology arms race” leaves consumers in a dilemma: Should they buy now or wait for the ultimate version that is always just around the corner?
Looking at 2024’s NEV launch speed, the average product refresh cycle has shortened to just a few months, yet user satisfaction has declined rather than increased. Consumers find that their newly purchased cars may soon face drastic price cuts or be replaced by newer models. While rapid iteration brings technological advancements, it also fuels anxiety among car owners who fear their purchases will quickly become obsolete.
II. The Safety Paradox: When Batteries Become Mobile Explosives
The term “spontaneous combustion” has been redefined in the NEV era, and slogans like “zero fire risk” are disappearing from marketing campaigns.
A viral video of a car manufacturer’s battery pack nail penetration test sparked widespread skepticism, with comments filled with doubts like “lab tests ≠ real-world conditions.” Every 10% increase in battery energy density leads to an exponential rise in safety risks—an alarming reality that resembles a capital-driven dance on a knife’s edge.
Ironically, while automakers now use “fire-resistant batteries” as a selling point, Volvo had already embedded safety into its DNA in the fuel car era. The safety risks of power batteries have become the Sword of Damocles hanging over the NEV industry.
Although debates over NEV versus fuel car fire rates persist, battery fires spread rapidly and can cause severe secondary damage. Moreover, plug-in hybrid and range-extended EVs face dual fire risks throughout their lifecycle, making the issue even more complex.
III. The Autonomous Driving Dilemma: The Fatal Temptation Behind the Blue Light
While Tesla’s Full Self-Driving (FSD) has yet to enter China, major domestic NEV makers have rushed to introduce their own “leading” autonomous driving technologies.
Automakers market Level 2 (L2) driver-assist systems as “autonomous driving,” and drivers entrust their lives to immature algorithms, pushing the limits of legal and ethical boundaries. Many smart driving features are disabled by default in new cars, but users often ignore critical warning pop-ups when activating them, placing excessive trust in the technology.
Analysis of driver-assist-related accidents shows that these incidents are not caused by system malfunctions but by drivers’ over-reliance on automation and their inability to handle unexpected situations when the system fails.
From autonomous driving to smart cockpits and AI voice assistants, NEVs are packed with high-tech features. However, these advancements are a double-edged sword—Tesla’s FSD remains highly controversial, while domestic brands are still refining their intelligent driving functions. A truly “safe” autonomous driving experience remains a distant goal.
IV. The Survival Elimination Race: A 100 Billion-Dollar Bloodbath
Amid the price war, the auto industry’s profit margin fell to 4.3% in 2024, while NEV manufacturers continued pouring massive investments into R&D. Despite improvements in new car profitability, most companies still operate at a loss.
Huawei’s Yu Chengdong once revealed that AITO loses $2,800 per vehicle sold, a situation common among new NEV players. However, halting production would lead to even greater losses, potentially driving companies into bankruptcy.
The NEV capital game has reached its final gambit—Tesla leverages global scale to cut costs, BYD achieves cost efficiency through vertical integration, and Li Auto builds an efficient operational system. Meanwhile, followers struggle with mounting financial deficits.
From well-known brands like Jiyue, HiPhi, and WM Motor to lesser-known names like Aiways, Byton, and Saleen, over 400 NEV startups have exited the market in the past decade. Xpeng’s founder, He Xiaopeng, predicted that only seven major auto brands would remain in China over the next ten years. Changan’s Chairman, Zhu Huarong, even forecasted that 80% of Chinese brands would disappear in the next 3-5 years.
When Elon Musk announced at Tesla’s shareholder meeting that the next-generation vehicle costs would drop by another 50%, the sound of keyboard typing in China’s automakers’ meeting rooms suddenly ceased. As the industry continues its brutal competition, whether these companies can survive the darkest hour before dawn remains unknown.
The NEV endgame may be exactly as Wang Chuanfu said: “This isn’t a battle of big fish eating small fish, but of fast fish devouring slow fish.” Yet in this battlefield, scorched by both capital and technology, the last one standing may not be a hero—just the last gambler who hasn’t fallen.
Who do you think will be the next NEV brand to collapse? Leave your predictions in the comments!
