Great Wall Motor, BYD Sink After Chinese Auto Giants Clash on Car Emissions Tests
Comment of the Day

May 25 2023

Commentary by Eoin Treacy

Great Wall Motor, BYD Sink After Chinese Auto Giants Clash on Car Emissions Tests

This article from Yicai Global may be of interest. Here is a section: 

BYD’s Qin Plus DM-i and Song Plus DM-i models use normal-pressure fuel tanks and therefore purportedly fail to meet the country’s vehicle emissions standards, Great Wall Motors said today, citing the filing it made to the Ministry of Ecology and Environment, State Administration for Market Regulation and the Ministry of Industry and Information Technology on April 11.

Great Wall Motors is paying close attention to the case to see if legal action will be taken, the Beijing-based carmaker said. Environmental protection authorities need to conduct a probe and legal proceedings must be started should the results show any irregularities, it added.

BYD retorted that it reserves the right to carry out legal action of its own and is firmly against any form of unfair competition. All of the Shenzhen-based company’s autos conform with national standards and they have all passed verification by the country’s authorities.

Great Wall Motor bought the two cars and sent them to the China Automotive Technology & Research Center for testing, BYD said. They were not tested according to national-level standards, it said.

Eoin Treacy's view

In normal times this kind of backbiting might be considered part of normal competition. However, the share prices of Chinese automotive companies suggest a scramble is one for market share amid slowing demand.
XPeng’s poor results and negative guidance today point toward a domestic Chinese demand environment incompatible with the rosy picture of post pandemic demand growth.

The potential for China to export deflation may be factoring into the demand for US tech shares. The logic being if China’s deflationary bias saps inflationary pressures, the Fed will be under less pressure to hike and a soft landing where the hit to growth is minimal and inflation dissipates will be more credible.

I have my doubts but that does appear to be the rationale investors are working off at present. 

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