China EV Price War Intensifies: Revenue Up but Profits Down, Multiple Automakers Swing to Losses in H1
Alina Collins
China's passenger-car retail sales fell 20% year-on-year to 8.7 million units in H1 2026, while lithium-carbonate and chip costs roughly doubled; Seres, GAC and JAC all swung to or deepened losses as margins were squeezed from both ends.
How much did costs actually rise?
Lithium carbonate jumped from roughly ¥80,000 per tonne a year ago to about ¥180,000 — more than doubling. Each Aito-brand vehicle reportedly costs an extra ¥15,000–20,000 as a result.
Automotive memory chips surged from about ¥20 apiece to nearly ¥100, according to Seres chairman Zhang Xinghai.
NIO chairman Li Bin said chip and material inflation added over ¥10,000 to the average cost per vehicle.
This means → automakers face a two-front squeeze — upstream lithium and chips — leaving even less room to keep cutting prices.
Whose profits took the hardest hit?
Seres expects H1 net profit to drop roughly 151%–161% year-on-year, swinging from profit to loss; losses at the Aito brand account for more than half of the group total.
GAC Group forecasts losses widening about 60%–80% year-on-year, with both its own brands and joint-venture lines hit by raw-material costs and higher promotional spending.
JAC Motors sees core-business losses widening by about ¥70 million, compounded by wider losses at associates and a roughly ¥400 million drop in forex gains versus H1 2025.
In plain terms = this is not one or two unlucky names — from premium to budget, from domestic brands to JVs, the entire lineup is bleeding.
What do the industry-wide numbers tell us?
CAAM data: auto-industry profit fell 20% year-on-year in the first five months; cost growth (2.3%) now outpaces revenue growth (1.4%).
This means → the industry is not just "earning less" — it is losing more on every car sold, because costs are rising faster than revenue.
This reflects a vicious loop: cut prices to grab volume → revenue growth slows → costs keep climbing → margins shrink even faster.
Consumers are swapping cars fast — why doesn't that help profits?
The average time a Chinese EV stays on the road is roughly one year and ten months, far below the roughly eight years and two months for a combustion car.
A Dongchedi survey found 43% of EV trade-in owners switched mainly for newer autonomous-driving features and a better user experience.
In plain terms = the faster consumers upgrade, the more often automakers must launch new models, pile on features and slash prices — R&D and promotional costs keep climbing, so selling more does not mean earning more.
Is Xiaomi's car business also buckling?
Xiaomi's Q1 net profit fell about 57% year-on-year; the auto unit swung back to a loss after its first-ever profit in 2025.
At the same time, Xiaomi faces intensifying competition from Huawei's Mate 70 series in premium smartphones — both business lines are under pressure simultaneously.
This means → even a cash-rich cross-industry entrant cannot burn money for volume indefinitely against rising input costs.
What should we watch in the second half?
The key test: whether automakers can restore margins through price hikes or cost cuts.
Raising prices is hard while the price war rages and consumers expect "the next model to be cheaper." Cutting costs is hard while lithium and chip prices show no near-term sign of retreating.
This reflects a pivotal moment for China's EV industry: scale has arrived, but a sustainable profit model has not.
Content is for reference only, not financial advice.