China's electric-vehicle industry is moving from a decade of rapid expansion to an era of cost discipline, with several major automakers announcing restructuring moves in late September. The most significant came on September 28, when GAC Group resumed trading of its shares after unveiling a plan to acquire FAW's 50% stake in FAW Toyota, effectively merging the two Toyota joint ventures in China. GAC's shares hit the daily limit on the first day of trading after the announcement, according to BusinessCars, a Chinese automotive media outlet.
Under the restructuring plan, GAC will issue new shares to purchase the FAW Toyota stake, with the issue price set at 5.75 yuan per share. Reports suggest GAC will take the lead in Toyota's manufacturing operations in China, while the sales side remains under negotiation among FAW, GAC and Toyota. The merger comes as the combined sales of the two Toyota ventures fell from 1.8 million units in 2022 to 1.58 million in 2025, and to just 928,000 units in the first eight months of this year, a drop of about 19% year-on-year.
The same day, Changan Automobile announced the creation of an AD (autonomous driving) coordination department to push its two BEV (battery-electric) brands, Avatr and Deepal, toward a strategy of "independent front-end, coordinated mid-and-back-end" operations. The new department, set at the first-tier level, will oversee planning, product, HR and finance functions, with shared centers for design, product development and platform technology at Avatr to take on R&D work commissioned by Deepal. Changan estimates the integration could cut costs by 20% to 30% through economies of scale, according to BusinessCars.
Xpeng has also confirmed a major internal restructuring, consolidating its four product lines (F, D, I and G) into two (G and D), cutting overseas models and sedans, and merging them into its SUV line while keeping the MONA sub-brand independent. The move aims to "concentrate R&D strength and optimize the internal R&D structure," the company said. Xpeng reported a 3.8% decline in total revenue in the first half of 2026 and a 173% widening of its net loss attributable to shareholders, underscoring the pressure on profitability.
Thin margins drive the consolidation wave
The restructuring reflects a broader industry squeeze. China's passenger-car market saw NEV penetration reach 65.2% in August, according to the China Passenger Car Association, meaning the advantages of electrification alone are dwindling. With vehicle models increasingly similar, the competitive battleground has shifted to intelligent features, a costly arms race. Huawei's Intelligent Automotive Solution business unit has raised its annual R&D budget for its Qiankun ADAS (advanced driver assistance system) to 19 billion yuan (about $2.7 billion), a scale most automakers cannot match.
Geely has been the earliest mover in this consolidation trend. After its "Taizhou Declaration" in 2024, the company folded the Geometry and Livan brands into Galaxy, privatized Zeekr from the US stock market, and merged Zeekr with Lynk & Co. The results are visible in its financials: administrative expenses fell from 3.5% of revenue in 2025 to 1.7% in the first half of 2026, R&D spending as a share of revenue dropped from 6.3% to 5.2%, and gross margin improved to 17.9% in the first half, with second-quarter margin reaching 18.4%. Geely also locked in annual supply prices with most suppliers in the first quarter, cutting battery and chip costs by 5% to 8% through centralized procurement.
For Changan, the pressure is acute. Both Avatr and Deepal are loss-making, with combined losses exceeding 4.4 billion yuan (about $620 million), according to the article. Deepal chairman Deng Chenghao said the goal of the coordination is to "fully promote platformization in areas of technological homogeneity and concentrate more quality resources to make safety and quality better."
The industry-wide shift marks a departure from the past decade, when automakers spun off dozens of independent companies to cover every market segment, each with its own R&D, procurement and sales teams. When sales were growing, extra volume masked inefficiencies. But with industry-wide profit margins having fallen from 7.8% a decade ago to under 3%, and even below 1.5% in some segments, redundant development costs, fragmented purchasing power and idle production lines have become direct drains on profitability, the article noted.
Whether these integration efforts will be enough to restore profitability remains to be seen, but the direction is clear: China's automakers are consolidating to survive the profit squeeze, betting that scale and shared platforms will outlast the era of brand-by-brand competition.
