“The good thing is that they can help make the adoption of autonomous driving more widely available to consumers,” Lee said.
There are close to 100 auto brands competing in China, including 70 traditional carmakers, and many are sacrificing profits for survival by offering steep price cuts, according to BofA’s Lee. Industry consolidation in the next two to three years will see less than 30 players left in the market, Lee said.
BofA estimates China’s EV penetration rate to reach 50 per cent of new car sales in 2025, compared to 42 per cent projected for this year. That would be an improvement from last year’s 35 per cent penetration rate.
“This is very different from the US and Europe because we have seen EV penetration slowing down in these two big markets in the past few months already,” Lee said.