According to data from the China Passenger Car Association, EV sales in China are slowing down. A Reuters report, citing this data, stated that sales of battery-powered EVs increased by 18.2% from January to February compared to 20.8% for all of last year. This slowdown has been fueled by rising competition in China, even as EV manufacturers are trying to spark demand by offering deep discounts on their cars.
Overall, 3.16 million passenger cars were sold in China in the first two months of this year. Interestingly, sales of new energy vehicles (NEVs) increased by 37.5% in the first two months of the year compared to a growth of 36.2% in 2023. China defines NEVs as BEVs (battery-powered electric vehicles), PHEVs (plug-in hybrid electric vehicles), and fuel-cell electric vehicles (FCEVs).
BYD (BYDDY) has been at the forefront of deep discounts on cars to fuel demand. According to Reuters, BYD has slashed prices of its 13 models by 17% on average. Other automakers have also joined in the price war, including Geely Auto (GELYF) and XPeng (XPEV), with discounts ranging from 9% to 17%. XPeng also saw its vehicle delivery numbers decline in February to 4,545 units from 6,010 a year ago.
The EV delivery numbers in February for Chinese EV majors, including Li Auto (LI) and NIO (NIO), indicated a deceleration in growth. Li Auto delivered 20,251 vehicles in February, up by 21.8% year-over-year but a 35% decline from January. NIO delivered 8,132 vehicles in February, a far cry from the 12,157 vehicle deliveries it made a year ago.
EV major Tesla (TSLA) is also struggling in China, with vehicle deliveries of 60,365 in February falling 19% year-over-year.
What Holdings are In KARS?
For investors interested in the EV and mobility sector, the KraneShares Electric Vehicles & Future Mobility Index ETF (KARS) is a good option. Even as KARS has declined by more than 20% over the past year, the ETF has gone up by more than 15% over the past five years. Some prominent KARS holdings include Tesla, Li Auto, and Aptiv (APTV).
