Chinese electric vehicle (EV) stocks experienced a downturn following government directives urging automakers to expedite payments to suppliers. This move aims to alleviate financial strains within the supply chain and address concerns over delayed payments.
Major Chinese automakers, including BYD, Geely, Xiaomi, Guangzhou Automobile Group, and FAW Group, have pledged to settle supplier payments within 60 days. This commitment comes in response to new regulations effective from June 1, mandating timely payments to smaller suppliers. The initiative seeks to stabilize the supply chain amid an ongoing price war in the EV market.
The price competition, intensified by aggressive discounting strategies, has pressured automakers to cut costs, often at the expense of suppliers. The China Iron and Steel Association highlighted that some automakers have demanded price reductions exceeding 10%, coupled with payment delays extending several months. Such practices have strained upstream industries, prompting calls for more equitable treatment of suppliers.
In response to these developments, shares of Chinese EV manufacturers, including NIO, Li Auto, and XPeng, experienced volatility. Investors are closely monitoring how these companies adapt to the new payment regulations and the broader implications for the EV industry’s financial health.
