Scary China electric car stat: Vicious price cuts by BYD are fuelling a new electric car price war that could destroy some car makers and result in cheap new EVs for export market such as Australia

The Chinese electric car market is in a self-destructive cycle of heavy price cuts and there are signs it could get worse, but this could be a boon for Aussie buyers.

Months of drastic price cuts from market leader BYD has forced rivals to follow suit, which is pushing some to the brink.

Even the Chairman of Chinese giant GWM Wei Jianjun said the consequences could be dire if it keeps on going.

“If it continues like this, the safety of China’s auto industry will be seriously threatened,” said Mr Wei to Sina Finance in an interview translated to English.

“Now, Evergrande in the automobile industry already exists, but it has not collapsed.” he continued, in reference to the implosion of the Chinese real estate giant in 2021 which had dire consequences for China's entire economy.

Bloomberg reported the number of EV makers in China has started to shrink for the first time, showing some smaller makers aren’t up to the fight.

The news outlet also revealed another alarming stat: Chinese electric car production isn’t even at 50 per cent of capacity.

This means the major players such as BYD, GWM and Chery can double down by boosting production output, which could result in even deeper cuts.

Senior automotive analyst at Bank of America, John Murphy, told Bloomberg there will be massive consolidation to soak up the excess capacity.

“What you’re seeing in China is disturbing, because there’s a lack of demand and extreme price cutting,” said John Murphy.

China will need to find an outlet for its overcapacity, which opens the door to an influx of cheaper cars for export markets.

This could see a return to the vicious price war that engulfed Australia in 2024, where BYD, Tesla, MG and others continuously slashed thousands off the price of a new car to maximise market share.

The consumer has been the winner and prices have barely risen since then, with some electric cars now at price parity with their petrol or hybrid powered rivals.

Since then even more Chinese electric car brands have launched in Australia including, Deepal, Geely, Leapmotor, Skywell, XPeng and Zeekr.

Electric car sales in Australia have stagnated since late 2024, except for the past month where the launch of the updated Tesla Model Y boosted sales by about 12 per cent compared to the previous May.