Automotive stocks, including Canoo Inc (NASDAQ:GOEV), Lucid Group, Inc (NASDAQ:LCID), Polestar Automotive Holding UK (NASDAQ:PSNY), VinFast Auto (NASDAQ:VFS), and Workhorse Group, Inc (NASDAQ:WKHS), are trading lower Monday following China’s slower-than-expected second-quarter economic growth.

The Chinese electric vehicle stocks also traded lower on Monday.

The second-largest economy grew by 4.7% from April to June, falling short of the 5.1% forecast by analysts.

The consumer sector faces challenges as retail sales growth hit an 18-month low due to deflationary pressures leading to price cuts on cars, food, and clothing.

Slow retail sales growth, rising unemployment, and reduced wages have made consumers more cautious about spending.

A deep dive into the China EV market: China has invested over $230 billion in the past decade to develop its EV industry, a vital component of the overall automotive sector.

Electric car sales remained robust in the first quarter of 2024, surpassing the same period in 2023 by around 25% to exceed 3 million units, IEA reports.

The bulk of additional sales came from China, which sold about half a million more electric cars than in the same period in 2023.

From January to March 2024, nearly 1.9 million electric cars were sold in China, marking an almost 35% increase compared to the first quarter of 2023. Since 2021, first-quarter electric car sales have typically accounted for 15-20% of total global annual sales.

Electric car sales could reach around 17 million in 2024. Most of the additional 3 million electric car sales projected for 2024 are expected from China, potentially representing around 45% of total car sales in the country.

The global automotive industry market reached $3.56 trillion in 2023 and will likely grow to $6.86 trillion by 2033, implying a CAGR of 6.77%.

Price Actions: LCID is down 13.30% at $3.69, PSNY is down 2.22% at $0.9987, VFS is down 4.98% at $4.61, and WKHS is down 2.62% at $1.68 at last check on Monday.

Photo via Shutterstock