XPENG CEO Predicts a “Survival of the Fittest” Era as The Looming Battle in China’s EV Market Continues

China’s electric vehicle (EV) market has seen explosive growth in recent years, becoming increasingly competitive as automakers vie for dominance. This intense competition has triggered several “price wars,” where companies slashed prices to meet sales targets, often at the expense of financial comfort. Despite these challenges, most automakers have managed to weather the storm. However, XPENG CEO He Xiaopeng has warned that the landscape could drastically shift in 2025, ushering in a far harsher reality for the industry.

In a recent email to employees, He reportedly outlined his concerns, calling the period from 2025 to 2027 the “elimination round” for the automotive industry. With hundreds of EV manufacturers in China, He predicted that many would either collapse or be acquired by larger players during this time. He emphasized that prices will likely continue to drop, competition will intensify, and some automakers will simply not survive. Describing the outlook for 2025, He characterized it as the toughest year yet for the industry.

XPENG itself has not yet achieved profitability, a goal the company has set for 2025. The email to employees seemed to underline the urgency of this goal, urging staff to maximize efficiency, perform their roles effectively, and help steer the company through this critical period. The focus, He implied, was to ensure XPENG emerges as a survivor and profitable contender rather than one of the casualties of the elimination round.

In 2024, XPENG recorded nearly 200,000 vehicle sales (190,068, to be exact). For 2025, the company aims to further increase sales volume while simultaneously cutting costs per unit to achieve profitability.

This isn’t the first time He has expressed such concerns about the industry’s future. In March 2024, he shared a similar vision, describing the next three to four years as a “knockout tournament” for automakers. Beyond that, he projected that the next seven to eight years would see the emergence of an “all-star competition,” in which only the strongest players would remain. He pointed out that the Chinese auto industry has already undergone significant consolidation, shrinking from 300 startups to fewer than 50 companies, only 40 of which actively sell cars each year. He further predicted that over the next decade, only seven major car companies would survive.

This kind of forecast is not unique to He Xiaopeng, though his openness and directness stand out, particularly given his role as the CEO of a prominent Chinese EV startup. His warnings align with those of other industry leaders. For example, Mercedes-Benz CEO Ola Källenius voiced a strikingly similar perspective in October 2024. Describing the current market dynamics, Källenius referred to it as a “Darwinian price war” and a significant market shakeout, noting that many of the players in the industry today are unlikely to survive the next five years.

As the Chinese EV market continues to evolve, it’s clear that automakers face an era of unprecedented pressure. Only the most innovative, efficient, and adaptable companies are likely to thrive, while others may find themselves casualties of this highly competitive landscape.

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