The electric vehicle (EV) industry is on the brink of a major shakeout, according to Deng Chenghao, Chairman of Deepal (Shenlan Auto). Speaking at the 2026 World New Energy Vehicle Conference, Deng emphasized that in this intensifying competition, isolated breakthroughs are no longer effective. Instead, comprehensive system capabilities are the key to survival and success.
The Fierce EV Competition Heats Up
Deng Chenghao didn’t mince words, stating that the EV market is entering an elimination phase. He painted a stark picture of the future landscape, predicting a significant consolidation of brands. According to his analysis, selling 3 million vehicles annually is merely the baseline for survival. Achieving 5 million to 7 million units in sales would mean the company is merely getting by, while only those capable of selling 8 million to 10 million units can truly thrive.
This outlook comes at a challenging time for China’s automotive industry. Deng highlighted several pressing issues faced by professionals in the sector. Domestic demand is under considerable pressure, while raw material costs are surging. Although exports offer a temporary reprieve, they are not a sustainable long-term solution. Furthermore, the operational rules in global markets are constantly evolving, rendering singular, isolated successes ineffective.
Mass Adoption and the Core Challenge
The新能源 (New Energy Vehicle) sector is now entering a phase of mass popularization and deepening penetration. Deng identified the shift from internal combustion engine (ICE) vehicles to electric powertrains as the core test for the industry. This transition requires manufacturers to not only produce compelling EVs but also to manage the entire ecosystem, from supply chains and charging infrastructure to consumer adoption and service.
Echoing these concerns, a recent report from Changan Automobile, shared via its investor relations activities on September 24th, also acknowledged the dual challenges of a pressured domestic market and complex international dynamics. The report noted that the withdrawal of earlier subsidy policies and increased consumer wait-and-see sentiment have led to a significant slowdown in domestic demand growth. The industry is now in a phase of ‘stock competition,’ where market share is fiercely contested, resulting in historically low profit margins.
System Capabilities Over Single Strengths
Deng’s message underscores a critical strategic shift. The era of relying on a single innovative product or technology to lead the market is over. Success will increasingly depend on a company’s ability to manage complex operations, integrate various business functions, and adapt to a rapidly changing technological and regulatory environment. This includes aspects like R&D, manufacturing efficiency, supply chain resilience, marketing, sales, and after-sales service.
The industry’s future will likely be shaped by companies with robust organizational structures, strong financial backing, and a clear vision for sustainable growth. The ‘elimination round’ Deng predicts will test the resilience and adaptability of every player in the EV space, separating the leaders from those who cannot keep pace.
