The Evergrande of EVs?: The Interview That Shook China’s Auto Industry

Great Wall Motor's Chairman Wei Jianjun caused a storm last month after he said there was an equivalent to the indebted property developer Evergrande in China's auto industry

Last month, Wei Jianjun, chairman of Great Wall Motors and one of the longest-standing figures in China’s auto industry, gave an unusually frank interview — and it sent shockwaves across China’s electric vehicle sector.

In conversation with Sina Finance CEO Deng Qingxu, Wei warned that China’s EV industry is dangerously unprofitable. He claimed that a company similar to the indebted property developer 'Evergrande' existed in China’s automotive market, but just hadn't collapsed yet.

Wei also introduced the concept of the “zero-mileage” used EV, a practice that has raised concerns about the health of the Chinese auto industry. Car companies basically offload new cars into the second-hand market, recording a sold vehicle in the process.

The consequences of his remarks were immediate and led to regulatory action, as well as a war of words in China’s auto industry.

The finger was immediately pointed at China’s largest EV producer BYD, whose debt is reportedly higher than it discloses due to its use of delayed payments to suppliers. (BYD denied Wei’s allegations, saying there is no such thing as an “Evergrande of the automotive industry.”)

Wei’s core message is hard to ignore: the boom in China’s EV sector may be masking deep financial challenges.

In today’s newsletter I include a translation of the full interview, which I think is really worth reading given the fallout, along with some key takeaways.

Is China’s auto industry in trouble?

If Wei is right and China’s EV industry is less healthy than we know, this is not good news for the rest of the world, as Chinese automakers will try to export their way out of trouble. It also raises the question of whether so much of the recent rapid growth has beeen due to price cuts.

Last month BYD slashed prices in China by as much as 34%.

It is an existential question for the global electric vehicle market. China is propping up global EV sales, as it’s responsible for two-thirds of global sales. China basically is the EV market at the moment.

According to the China Passenger Car Association, the profit margin of the automobile industry was 4.3% last year, lower than the average of 6% for national industrial enterprises.

According to one Chinese media article published today, the problem isn’t just at BYD:

The true problem lies in the widespread unspoken rules found in almost every car company. On the supply side, this means extending payment periods and effectively 'borrowing' funds without cost. On the demand side, it involves fictitious sales and artificially boosting performance figures. What some call 'BYD's illness' is, in fact, a pervasive common problem for the entire automotive sector.

Taking action

Last week a number of Chinese automakers, including BYD and Geely, committed to pay their suppliers within 60 days, following regulatory scrutiny.

According to Wind Financial, a financial data platform, Chinese listed auto companies took an average of 182 days to settle their accounts with suppliers last year, with most taking between 60.4 and 232.8 days. The FT has a shocking graphic showing this data, highlighting how long Chinese carmakers take to pay their suppliers!

Wei is a veteran of the industry who built Great Wall Motors from a struggling car company in the city of Baoding, which he bought in 1990 when he was 26 years old. He is worth $10.1 billion, according to Bloomberg’s Billionaire Index.

The company sold over 30,000 NEVs in May, making up 32% of its total vehicle sales.

First, what I’ve been reading this week:

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The Essential Five

• [MUST READ IN THE FT]. China’s car industry runs on empty as supply chain bills go unpaid. “Current liabilities exceeded current assets at more than a third of publicly listed car manufacturers at the end of last year, according to FT calculations based on their most recent financial reports.”

• Chinese lithium production shows no signs of slowing down, despite low lithium prices, which have sunk below 60,000 yuan ($8,364) a tonne, according to MySteel.

  

• DE-RISKING: “POSCO Future M Co., South Korea’s leading battery materials maker, has secured itself a China-free cathode material supply chain after completing a new precursor plant in the southern port city of Gwangyang.” Link to report here.

• Chinese retail sales of NEVs (new energy vehicles) have surpassed gas-guzzling SUVs this year, according to latest data. Passenger car NEV sales were 4.36 million between January and May this year, compared to 4.32 million for SUVs, according to data released by the China Passenger Car Association (CPCA). Just over 1 million NEVs were sold in May for the first time.

• China’s battery exports rose by 68 % this year to 102.9GWh, according to China Automotive Battery Innovation Alliance. May exports fell by 14.6% from April but there was no serious slowdown despite trade tensions. China produces almost all of the world’s LFP batteries, which are used in US energy storage installations.

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Sina Finance interview with Wei Jianjun

Wei couches his criticisms in the Communist Party phrase of “Seeking Truth from Facts” - 实事求是, yet he is remarkably frank and critical.

Some key takeaways from me:

• Wei says the losses are "extremely serious"

• Constant price cuts are damaging both at home and abroad

• Zero-mileage used cars are masking sales figures

• Despite the propaganda that China exports green technology to the Global South Wei says China shouldn’t just sell EVs to these countries, and the shift should be gradual. He is happy to sell diesel vehicles to Africa for example. That was interesting to see.

This is my translation, with the help of Google Translate and DeepL, but I’ve tried to ensure it’s accurate. I’m sure I’ve made mistakes so please let me know. You can watch the full interview on YouTube:

Deng Qingxu: Hello, Mr. Wei! We meet again — it's our third time now. Back when I first interviewed you, I never imagined there would be a third time. Some of our close friends say that you're a "hidden gem" (宝藏男孩) of the auto industry — like a treasure trove. That's also why I'm happy to come here. They say, "How is it that you always have so much to talk about?" I'm not sure how you feel about that, Mr. Wei.

Wei Jianjun: Every time I feel that I have not said enough, and I still have a lot to say. I think as people in the automotive industry who have been engaged in this for 35 years, I think we should say some things that others don’t say, or don’t want to say, don’t dare to say, or are afraid.

What I said is all in reality. I think this society seeks truth from facts (​​实事求是). I think it is rare to be truthful and pragmatic. The main reason is for the high-quality development of our automotive industry, or the economy.

I have been working in the automotive industry for 35 years. In the 1980s, China’s automotive industry was very backward, so people of our age especially cherish the rapid development of the past 30 to 40 years.

We have experienced reform and opening up （改革开放.) I am a witness, practitioner, and also want to be a defender.

An old hand in China’s auto industry

Deng Qingxu: Mr. Wei is an old automotive person. He is a witness to the reform and opening up, and a witness to the development and prosperity of the automotive industry. He is also a technical person who is very familiar with the automotive technology school, so I want to hear your opinion.

Wei Jianjun: Over the past 40 years of reform and opening up, China’s automotive industry has indeed developed rapidly. Today, Chinese automobiles have entered the global stage. Our progress deserves recognition — it’s been commendable, especially in the past decade with the development of electric vehicles.

One could say the country has paid a very large price to support this industry.

But in this industry, I think, there is still a lot of room for improvement. Competing in the automotive industry is not only technology, not only the supply chain, but is also the ability to navigate and integrate into overseas markets - to operate lawfully and honestly. The question is: do we possess those capabilities?

Speaking Out

Deng Qingxu: You are speaking out for the industry, right? Many people don’t understand. Some people have said on the Internet that if you blow out other people’s lights, you won’t be much better off yourself. What are you trying to do? Is it worth it?

Wei Jianjun: The key to blowing out other people’s lights is what kind of lights. If it is a ghost light 鬼灯, I must blow it out to allow this industry to develop healthily. So when doing something, you still have to look at the long term, not to solve current problems, but to solve future problems. As long as this industry develops healthily and does not discredit Made in China and suffer huge losses, I think it is worth a few scoldings.

The state of China’s EV Industry

Deng Qingxu: Some netizens also commented that our new energy development is quite good, and that Mr. Wei is not a pessimist and is overly pessimistic about this industry?

Wei Jianjun: It's not that I'm pessimistic about electric vehicles — for EVs to develop in a healthy way, they must not be excessively driven by capital. Any business must be profitable; it needs to generate returns, sustain itself, and continue to invest in order to grow. We respect capital, but things shouldn’t become overly capitalized — that’s what I mean. Right now, some automakers are overly focused on chasing market valuation and boosting their stock prices. Too much effort is being put into that.

I’ve also called for this: Great Wall is willing to pay for a full audit of all the major car manufacturers in our industry. We’ll cover the audit fees. If things continue like this, the security and stability of China’s auto industry will be seriously threatened.

Frankly, a 'Evergrande' already exists in our automotive sector — it just hasn’t collapsed yet.

I truly hope that we don’t waste the decades of national support — including new energy — that we’ve received. The auto industry has been designated as a pillar industry and a key area of development. We can’t let all that effort go down the drain.

“The losses in pure electric vehicles are extremely serious,” Wei Jianjun.

Pure electric vehicles are experiencing extremely heavy losses, making it fundamentally impossible to establish a sustainable business model. (纯电车亏损都特别严重，根本就形成不了一个商业闭环). Capital has already made its money — in fact, some early investors have even cashed out. What’s left now is just the industry itself.

So how do we go forward? Everyone is still losing money selling cars.

Deng Qingxu: If the subsidy policy for new energy is withdrawn now, will a group of companies die? The country does not want to see it.

Wei Jianjun: Since it is unhealthy and cannot be truly commercialized, new energy policies that can be withdrawn should be withdrawn. Ensuring the healthy development of the nation is the core and essence of our 'truth-seeking' (求是) today.

Deng Qingxu: That is to say, the country still needs to pay attention to a problem of long-term pain and short-term pain (ie it’s better to solve a problem quickly than suffer long-term pain.)

Going Overseas

Wei Jianjun: When we truly go global (or enter overseas markets), electric vehicles will not replace all energy sources. There are many reasons for this. I believe it should be a gradual process. Electric vehicles should find the scenarios where they are most suitable.

​​I believe the government has also recognized this – and is also supporting internal combustion engine vehicles (ICEVs). As a development goal for us, we aim to become a powerful automotive nation.

In reality, a powerful automotive nation must provide mobility solutions for all global markets. What I provide to them, once purchased, should create value for them and solve their problems. This is what we should be focused on serving

Technology should solve problems for users, not be used here to show off or boast about what you have. Therefore, the country (or national policy) is also adapting.

Now, when we go to Africa, diesel vehicles sell very well. The important thing is to solve significant problems for African users. So, our diesel, gasoline, hybrid, plug-in hybrid, and pure electric (offerings should develop incrementally/gradually).

Deng Qingxu: I understand now — for China's automotive industry, if we look at it from a global perspective, it shouldn't just focus on purely electric vehicles. It should pursue full-spectrum power development to serve the global market. What we used to call 'changing lanes to overtake' is actually just part of the picture. It should include changing lanes to overtake, turning the corner to overtake, and even what we are now facing direct head-to-head competition (PK, internet slang for competition) — these are all scenarios that should exist, this is healthy.

Wei Jianjun: Take Russia, for example. Can you really expect them to develop electric vehicles? It's too cold there; it's simply not suitable.

Of course, Great Wall (Motors) strongly supports the nation's development of electric vehicles. EVs are absolutely fantastic for urban use.

I believe we should particularly focus on supporting the development of small electric vehicles. This means technology must serve society and be a benevolent participant within it. In other words, technology must be for good. Our country has proposed 'dual carbon' goals and high-quality development, and high-quality development inherently means being environmentally friendly. I believe our small electric vehicles have many, many opportunities as they go global.

Supply chain financing

Deng Qingxu: Looking back at the first two interviews, we actually found that what Mr. Wei said later had some reactions at the national policy level. The state also specifically mentioned in many documents that the auto industry should oppose this kind of bad, disorderly, and malicious involution (内卷 a Chinese phrase meaning hyper-competition and stagnation). So after this situation was mentioned, is there any improvement?

Wei Jianjun: I'm genuinely pleased and comforted to witness the positive changes in our country. However, there's still a lot of competition that disregards commercial rules. For example, some companies are endlessly pressuring suppliers to lower prices, pushing them into extremely difficult survival conditions. There are also many instances of delaying payments to suppliers, with some payments being held for nearly a year. How are suppliers supposed to survive like that?

Furthermore, some automakers are cutting corners, even compromising on safety. When it comes to vehicle safety, lifespan, and reliability, some products have seen their prices drop from 220,000-230,000 RMB down to 120,000-130,000 RMB. What kind of industrial product can drop by 100,000 RMB and still guarantee quality? That's absolutely impossible.

Deng Qingxu: Consumers have a misunderstanding that if I buy a cheap car, I have to get a good deal, but when I hear you say this, it seems that I bought a cheap car, but in fact I bought a hidden danger.

Wei Jianjun: I think we need to coin a new term now. Previously, it was called 'existing owners getting stabbed in the back' (or 'betrayed by falling prices'), but that's no longer the case. Now, it should be called 'new owners getting stabbed in the back' because if you bought a car last month, the price drops this month.

Furthermore, we're now acting very unethically overseas. Foreigners don't understand it; international customers are completely bewildered. A car that costs 150,000 yuan is selling for 100,000 yuan just six months later. If I, as a consumer, just bought a car for 150,000 yuan and lose 50,000 yuan on it half a year later, how do you expect our Chinese brands to develop abroad? This kind of unlimited price reduction. Now there's even a strange phenomenon called 'zero-kilometer used cars'

“Zero-mileage” second-hand cars

Deng Qingxu: What is a zero-kilometer second-hand car?

Wei Jianjun: Once the initial photos are taken and the vehicle is registered, it's considered sold, but then it's immediately put back into the market.

How can a used car have 0 kilometers on it? In reality, it's a new car that's now being treated as a used car, simply because it's been registered and had its license plates issued. In other words, 'zero-kilometer used cars' are inherently a chaotic phenomenon. You can go to platforms like Dongchedi, Guazi, or Xianyu right now and see thousands of dealers – three or four thousand – selling these 'zero-kilometer used cars'. It's incredibly messy. The start of 2025 has seen the emergence of this strange phenomenon: excessive promotion, exaggerated claims, and our users' rights are not being protected.

Deng Qingxu: Many of our car companies are packaging their technology as 'black technology' (a term implying something incredibly advanced, almost magical, often with a hint of exaggeration), and they're overstating their intelligent driving capabilities, among other things.

Wei Jianjun: Therefore, we need to strengthen the governance of the automotive industry, so that this industry, which we have cultivated with immense investment over so many years, can achieve healthy development.

Deng Qingxu: So, from a regulatory perspective, do you think it's better for the industry to appear harmonious and outwardly peaceful, or for problems to be immediately addressed by clearly defining rules and boundaries, which would then foster healthier industry development?

Wei Jianjun: Our country, especially in 2024 and 2025, has repeatedly emphasized high-quality openness, which means integrating into the global community. We must respect, and even strictly adhere to, the regulations of other countries. It's like competing in the Olympics: we cannot take performance-enhancing drugs or try to gain an unfair advantage when running a marathon. The automotive industry represents China's image on the world stage. China has high-speed rail, which is excellent and absolutely world-leading. When we sell cars globally, we interact with users worldwide, and that influence is immense.

Deng Qingxu: Great Wall has always been a culture of integrity, and the background of our interview also has "seeking truth". I now find that you are practicing and advocating a culture of seeking truth.

Wei Jianjun: Seeking truth from facts (实事求是) has always been the basic requirement of our Party (CCP) and the governance of the party and the country. I think this statement is very great.

When a thing or society is filled with those who tell lies and lies everywhere, this society will definitely not be able to develop healthily. We at Great Wall have always been adhering to the principle of integrity first. We at Great Wall have been practicing our integrity and credit to the country, society, and users.

Deng Qingxu: We initially named this interview "seeking truth" (求真), but after communicating with President Wei, we gradually changed it to "seeking truth" (求是). There is only one word difference, and I wonder what the difference is?

Wei Jianjun: "My understanding is that 'seeking truth' (求真) is more about identifying problems, like holding a torch and seeing an issue. 'Seeking truth from facts' (求是), however, means taking that torch and figuring out how we get out of this predicament. It's like having a navigation system or a map to complete the task thoroughly. That's 'seeking truth from facts'.

Deng Qingxu: I feel your passion, it's just like your car engine – always passionate.

Wei Jianjun: It feels like a responsibility, and perhaps also a challenge.

Deng Qingxu: Driven by this responsibility – a responsibility to your company, the industry, society, and even to the development of 'Made in China' overseas – you've insisted for so many years on speaking frank truths that others wouldn't dare to. Looking back, do you ever feel lonely on this path?

Wei Jianjun: Not at all, I feel great, honestly. I haven't done anything extraordinary. I've simply done what my conscience tells me is right, what allows me to feel at peace. Building good cars, I believe, is simply my duty.