XPENG CEO: “Elimination Round” Hitting in Chinese EV Market in 2025

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The Chinese electric vehicle market has gotten a lot bigger in the past year as electric vehicles have gotten more and more competitive. As part of that, there have been occasional “price wars” in which automakers aggressively lower prices in order to reach sales targets — even to the point of getting quite financially uncomfortable. However, everyone has basically skated through alright. They’ve survived. XPENG CEO He Xiaopeng, however, thinks that could all start to change in 2025.

He Xiaopeng recently said that 2025 could be the beginning of a harsh time for automakers in China. Reportedly, in an email to employees, he wrote, “The period from 2025 to 2027 marks the elimination round in the automotive industry.” There are hundreds of EV producers in China, and he (as well as others) expects that many of them will go under, or at least be swallowed up by others. Prices will continue to come down, competition will continue to grow, and some — or many — automakers will not be able to hang in. “Competition in 2025 will be tougher than ever before,” Xiaopeng added.

Notably, XPENG itself isn’t profitable yet. The company’s goal is to achieve profitability this year. And that is surely what the letter was trying to emphasize — that the company needed everyone to work hard in order to be efficient, do their jobs well, and come out of this “elimination round” alive and profitable rather than one of the victims.

XPENG’s sales have been rising fast, as I’ve written in a couple of recent sales reports on the company. See “XPENG & NIO Sales Soar to Record Highs in December” and “NIO & XPENG Sales Trends Across 5 Years — Charts!” for details. The charts tell the story well enough, though:

As you can see, XPENG reached nearly 200,000 sales in 2024 (190,068). The aim is that this year, the volume goes up a bit more and costs per unit come down enough that the company reaches profitability.

None of this is new from He Xiaopeng, though. This has seemingly long been the CEO’s view and part of his vision for XPENG. In March 2024, he spoke with Singapore’s CNA and said that the next 3 to 4 years would see the industry face a “knockout tournament,” and then in the coming 7 to 8 years we’d have a resulting “all-star competition.” He also spoke with The Straits Times in Singapore and, regarding the Chinese auto market, said, “Out of 300 start-ups, only 100 survived. Today there are fewer than 50 companies still in existence, and only 40 of them actually sell cars every year.” He added, “Personally, I believe that in the next ten years there will only be seven major car companies left.”

Of course, this kind of thinking is widespread, and we’ve been saying similar things for years, but He Xiaopeng is being very open and direct about it, and from a rare position in the market — as the CEO of a hot, rising, Chinese EV startup. Though, Business Insider points out that Mercedes-Benz CEO Ola Källenius said something highly similar in October 2024. “It’s strange. It’s a Darwinian price war, a market shakeout. And many of the players that exist now will no longer exist. Many of them will no longer exist in five years,” Källenius said. So, there’s probably widespread consensus around the market on these points. The question is, who will survive? Which companies will scale up demand enough while cutting costs enough that they end up on top of a mature EV market? We will see….