Geely, a China’s second-largest carmaker, has halted plans for new manufacturing plants, according to industry experts.

This decision aims to address global overcapacity in the automotive sector and respond to ongoing price competition.

Chinese car manufacturers have introduced record discounts, with rates increased from 8.3% to 16.8% in April 2024, as reported by JPMorgan Chase in May 2025.

Analysts believe that reducing production capacity could alleviate inventory pressures and stabilize the automotive market.

Geely, which operates brands including Zeekr, Lynk, and Galaxy, reported increases sales and profit. The company delivered 2.18 million vehicles in 2024, marking a 32% rise from the previous year.

Electric vehicle (EV) sales surged by 92% to over 888,000 units. Geely’s net profit reached 8.5 billion yuan (US$1.2 billion) last year, reflecting a 52% year-on-year growth.

🔗 Source: South China Morning Post

🧠 Food for thought

1️⃣ China’s overcapacity crisis reveals the perils of rapid EV expansion

The severe discount war in China’s auto industry, with price cuts reaching a record 16.8% in April, highlights the dangers of unchecked production expansion in a maturing market.

Only half of China’s massive EV production capacity of 20 million units was utilized in 2024, according to Goldman Sachs data, creating unsustainable market conditions 1.

This overcapacity extends beyond China, with vehicle sales dropping significantly in Europe. For example, Germany’s annual sales fell from 3.6 million in 2019 to 2.8 million, suggesting a global industry adjustment is underway 2.

The market correction is particularly challenging for pure EV manufacturers who lack the diversified portfolio that companies like Geely have developed through their “multi-energy” approach of offering various powertrains 3.

Chinese automakers’ aggressive discounting strategy to clear inventory directly impacts profitability, creating pressure to find alternative growth paths as domestic competition intensifies.

2️⃣ Export-led growth emerges as Chinese automakers’ solution to domestic saturation

Chinese automakers are pivoting toward international markets as a strategic response to domestic overcapacity, with EVs now representing 33% of China’s total vehicle exports in early 2025, up from 25% in previous years.