Porsche’s Decline in China: The Rise of Domestic Electric Vehicle Brands
Porsche has fallen on tough times in China as the country’s electric vehicle (EV) industry continues to gain momentum. The German luxury carmaker saw its sales plunge 42% in the first quarter of this year, accelerating a decline that began in 2024. The main culprit behind this downturn is China’s rapidly growing EV market, which is increasingly encroaching on the high-end segment traditionally dominated by European brands.
The Shanghai auto show, one of the largest international car exhibitions, provided anecdotal evidence of the challenges facing legacy manufacturers. Chinese buyers are increasingly turning to homegrown brands that offer competitive pricing, advanced technology, and innovative features. The Huawei-backed AITO brand, for instance, is gaining traction with its luxury SUV, the M9, which is priced at about half the cost of its Mercedes-Benz GLS counterpart.
Song Junqun, a 41-year-old worker in the semiconductor industry, and his wife, Yu Qiong, were among the many visitors to the AITO showroom. They were impressed by the M9’s advanced smart driving systems and decided to purchase it over Mercedes’ latest EV models. “We made many comparisons and found that Chinese cars definitely perform better in the field of intelligent driving,” Song said.
China’s EV industry has made significant strides in recent years, with BYD emerging as a leading player. The company overtook Tesla as the world’s top EV seller in 2024, with sales of over 4.27 million fully electric and hybrid vehicles. BYD’s success is attributed to its innovative technologies, including its five-minute fast-charging capability.
The Chinese EV market is highly competitive, with over 130 brands vying for market share. While this has driven innovation, it also raises concerns about oversupply and the potential for a market shakeout. Global consulting firm AlixPartners predicts that only 19 Chinese EV brands will be profitable by 2030.
The rise of Chinese EV brands also has implications for the Australian market. With no tariffs in place, Chinese carmakers see Australia as a valuable testing ground for their competitiveness. BYD has already made inroads into the Australian market, with its Shark 6 plug-in ute cracking the top 10 best-selling vehicles last month.
As the Chinese EV industry continues to evolve, it remains to be seen how legacy manufacturers like Porsche will adapt to the changing landscape. One thing is certain, however: the Chinese EV market is a force to be reckoned with, and its impact will be felt globally.
