BEIJING — China’s electric car market is headed for a sharp slowdown in 2025, according to analyst predictions, increasing pressure on companies trying to survive.

Sales of new energy vehicles, a category which includes battery-only and hybrid-powered cars, surged last year by 42% to nearly 11 million units, according to the China Passenger Car Association. Market leader BYD‘s NEV sales skyrocketed — up by more than 40% last year to nearly 4.3 million units, far above its internal target of at least 20% growth from 2023.

But looking ahead, HSBC analysts forecast only a 20% increase in China’s new energy vehicle sales this year, alongside heightened industry consolidation. They predict BYD unit sales growth of around 14%.

Strong sales volumes have enabled “strugglers and stragglers” to hang on despite falling margins, Yuqian Ding, head of China autos research at HSBC, said in a report last week. She pointed out that only BYD, Tesla and Li Auto made a profit in 2023.

“In our view, this situation is unsustainable and we expect the pace of industry consolidation to accelerate rapidly,” Ding said.

China’s mix of subsidies and consumer purchase incentives have supported the rapid growth of new energy vehicles in recent years.

Shenzhen-based laser display company Appotronics didn’t even have an autos business until it started making an in-car projector screen that began deliveries in China early last year. The company shipped more than 170,000 units last year.

But in a sign of a changing market, the company only expects similar volumes in 2025, Appotronics Chairman and CEO Li Yi told CNBC last week. He predicted the market wouldn’t pick back up until 2026.

“A lot of customers, the automakers, they’re not in a good financial state. They cut the R&D budget. That will definitely have a negative impact on this industry,” Li said, also noting overcapacity issues.

As automakers piled into China’s fast-growing electric car market, they began a price war in a bid to attract customers. Smartphone company Xiaomi launched its SU7 electric sedan last year at $4,000 less than Tesla’s Model 3, and with claims of a longer driving range.

“When BYD and Tesla cut prices, most rivals have little choice but to follow suit. This has clearly squeezed the overall profit pool in the auto industry, especially now that EVs have all the momentum,” HSBC’s Ding said, noting that BYD has a net profit margin of only 5%, less than the low teens for top automakers when the traditional fossil fuel car was at its peak.

NEV penetration of new cars sold had exceeded 50% by the second half of the year, association data showed.

Because of the high penetration rate, the growth rate of new NEV car sales will likely slow to 15% to 20% in 2025, according to Fitch Bohua analyst Wenyu Zhou and a team. They expect so-called smart features will increasingly become a major point of competition.

Automakers in China have increasingly turned to in-car entertainment features and driver-assist technology as ways to make their vehicles stand out.

While the electric car market moderates its growth, Appotronics plans to bring a 4K-resolution projector to cars in China this year, along with a screen that has better contrast and privacy features, Li said.

As for the longer term, the company intends to spend the next two to three years on developing new, laser-based uses for car headlights, Li said. He added the company is in talks with Tesla for a projector-type product in a next-generation vehicle, but could not say more because of a non-disclosure agreement.

Cliff Asness, co-founder of AQR Capital Management, believes bitcoin is in a speculative bubble after the cryptocurrency’s swift rally carried it above $100,000 following the November presidential election.

“I’m on the bubble side, on net,” Asness said on CNBC’s “Money Movers” on Monday. “To move me off that, you really need not a price change, but a use case. That’s what could convince me to become maybe more of a crypto person when I find any use for it, aside from speculation and criminality.”

Asness said there are three uses for crypto that he has identified: speculation, use in war-torn countries and paying cyber ransom.

Bitcoin rallied 120% in 2024 after a huge year-end pop on the back of President-elect Donald Trump’s election. Investors hoped Trump would usher in a golden age of crypto, including supportive deregulation of the industry and a national strategic bitcoin reserve. The digital coin has dipped 3% in the new year, last trading near $90,000.

“There’s no fundamental trend for crypto because I don’t know what the fundamentals are, but there is a price trend,” Asness said. “So I would guess most trend followers who have it in their universe are actually long.”

Although Asness is bearish on crypto, he noted that he would not bet against it due to its volatility.

“I wouldn’t short crypto only because shorting things with 100% annual volatility can be a little scary. I think we’ve all discovered what concentrated shorts can do to a portfolio,” he added.

Asness co-founded AQR in 1998 after a stint at Goldman Sachs. He and his partners established the quant-driven firm’s investment philosophy at the University of Chicago’s Ph.D. program, focusing on value and momentum strategies.