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Electric vehicle sales defy falling spending in China as price cuts attract buyers

Electric vehicles remain a bright spot in China’s auto market as battery car makers have overcome falling consumer spending at home with price cuts and new model launches.

Major manufacturers, from BYD Co. to Nio Inc., all reported strong sales growth in May. Seres Group Co., which works with Huawei Technologies Co. to make the popular Aito electric vehicles, saw the biggest increase, delivering 34,100 cars, almost triple the number in the same period last year. Nio reported a 234% increase in units sold, while Zeekr Intelligent Technology Holding Ltd. saw its sales more than double.

BYD, the country’s best-selling brand, sold 330,488 passenger vehicles in May, an increase of just over a quarter from last year. Two other electric vehicle makers also saw sales rise, with Xpeng Inc. posting a 35% increase and Li Auto Inc. seeing deliveries rise 24% in May.

Those numbers supported stocks, with automakers leading gains in Hong Kong. BYD shares rose as much as 6.1% as of 11:55 a.m. Nio shares in Singapore gained as much as 5.1%. Li Auto rose 5.25% and Xpeng posted a 1.7% gain.

This continued growth comes as Chinese electric vehicle producers face increasing challenges domestically and internationally. Chinese consumers limited their spending on everything from clothing to office supplies and automobiles in April. With slowing demand for battery-powered vehicles increasing competition, electric vehicle makers are scaling back and accelerating the launch of new models. BYD intensified the price war by slashing prices on many popular models in February, prompting others to follow.

Meanwhile, access to new foreign markets where manufacturers can charge higher prices is threatened by trade measures such as possible tariff hikes in the European Union and the United States, which have imposed an import tax of more than 100% on Chinese electric vehicles.

Nonetheless, domestic sales appear to offer some comfort with electric vehicles and plug-in hybrids expected to grow 33% to 770,000 vehicles in May, compared to a 5.3% decline for all deliveries, including gasoline-powered cars, according to preliminary data from the China Passenger Car Association. The drop is likely because the Labor Day holiday week falls entirely in May this year, the association noted.

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