What if China's EV price war triggers a wave of bankruptcies?
A domestic EV price war bankrupting a tier-one Chinese automaker cascades through suppliers and bank loans: short China autos/suppliers, KWEB and the yuan, with semis catching it via auto-chip exposure. The tariff-war analogues are a stretch — this is a domestic overcapacity/deflation event, closer to a China industrial shakeout than a trade shock. Transmission: supplier-chain defaults mark down bank loan books. Forward: brutal EV overcapacity and price deflation are a uniquely Chinese balance-sheet risk with no Western analogue, so policy tolerance for a marquee bankruptcy is the swing factor.
how we built this number — every step
The class rate is measured from our dated, sourced event library (decade-normalized Poisson — the full table is public at base_rates.json). The variant’s share within its class is the analyst’s editorial call, published so you can audit it. A wider range means thinner precedent. Full recipe: methodology · scored at Reality Check.
The butterfly cascade
How this trigger trickles across markets, left → right — the root shock, its first‑order moves, then the ripple effects. Drag any node; tap a market for its real price history.
Resolution timeline — how this probability is moving
Our model's odds (gold) over time vs the crowd's (Polymarket, blue), from the past toward the 6–18 months horizon. Each dot is a real macro event that nudged the probability — green pushed it up, red pushed it down. Tap a dot for the source. The gold path is an illustrative reconstruction anchored to today's estimate — real dated events, not a live re-estimate history.
What it would mean
If this plays out, it is a risk-off shock. A brutal domestic EV price war bankrupts a tier-one Chinese automaker, cascading through suppliers and bank loans. The trigger decomposes into signed root‑shocks — China growth ▼ · Credit spreads ▲ · Trade tension ▲ — which propagate through our causal graph to the markets below.
If it happens — the markets it would move
Biggest moves first. Projected moves are cascade-model priors; hist A–B% = what comparable past events actually did (measured abnormal returns), and model prior · unmeasured marks markets with no analogue backing yet. Tap any market for its price history.
| Market | Class | Projected move | |
|---|---|---|---|
| 1 | Nasdaq 100 NDXon Hyperliquid 📈 chart | Index | ▼ -1.3% hist -1.41–-0.19% · other way +0.28% (n=12) |
| 2 | Semiconductors SMHon Hyperliquid 📈 chart | Equity | ▼ -1.2% hist -0.79–+0.26% · other way +2.93% (n=12) |
| 3 | Alibaba BABAon Hyperliquid 📈 chart | Equity | ▼ -1.2% hist -1.01–+0.22% · other way -3.17% (n=11) |
| 4 | Nvidia NVDAon Hyperliquid 📈 chart | Equity | ▼ -1.0% hist -0.7–-0.24% · other way +2.7% (n=12) |
| 5 | TSMC TSMon Hyperliquid 📈 chart | Equity | ▼ -1.0% hist -0.78–+0.34% · other way +3.77% (n=12) |
| 6 | Chinese yuan CNY 📈 chart | FX | ▼ -0.8% hist -0.83–-0.1% · other way -0.59% (n=12) |
| 7 | Tech sector XLK 📈 chart | Equity | ▼ -0.9% hist -0.62–-0.17% · other way +0.44% (n=12) |
| 8 | AMD AMDon Hyperliquid 📈 chart | Equity | ▼ -0.8% hist -1.05–-0.03% · other way +0.32% (n=12) |
| 9 | Broadcom AVGOon Hyperliquid 📈 chart | Equity | ▼ -0.8% hist -0.98–+1.13% · other way +3.64% (n=12) |
| 10 | Micron MUon Hyperliquid 📈 chart | Equity | ▼ -0.8% hist -1.82–+0.3% · other way +4.23% (n=12) |
| 11 | Marvell MRVLon Hyperliquid 📈 chart | Equity | ▼ -0.8% hist -0.52–-0.29% · other way +1.94% (n=12) |
| 12 | Freeport (copper) FCX 📈 chart | Equity | ▼ -0.8% hist -2.47–+0.57% · other way -0.01% (n=12) |
| 13 | Copper XCUon Hyperliquid 📈 chart | Commodity | ▼ -0.7% hist -2.25–+0.33% · other way +1.57% (n=12) |
| 14 | ASML ASMLon Hyperliquid 📈 chart | Equity | ▼ -0.7% hist -0.83–-0.05% · other way -1.4% (n=12) |
Probable recommendation
Why we may diverge from history
Trust the cascade short: AVGO's +8.7%/87% history is one regime — every analogue is the 2025 tariff-war round-trip where AI-capex demand overwhelmed the China channel; an EV-maker default won't replay that semis bid.
Historical precedent — what analogous events actually did
Across 40 analogous events (overlap‑weighted), as abnormal returns — market beta stripped, so it's the event's own effect, not the market backdrop. Shown at 20 days (persistent) and 5 days (immediate); ↺ fades = the two horizons disagree. Confidence = consistency × sample × significance.
| Asset | History says | Abnormal (20d · 5d) | Hit | n | Confidence | vs cascade |
|---|---|---|---|---|---|---|
| SOL SOL | SHORT | -15.0% · 5d -16.6% | 72% | 19 | 0.32 | ✓ matches cascade |
| ETH ETH | SHORT | -5.3% · 5d -7.4% | 66% | 25 | 0.27 | ✓ matches cascade |
| XCU XCU | SHORT | -1.7% · 5d -1.9% | 65% | 39 | 0.25 | ✓ matches cascade |
| XLF XLF | SHORT | -0.6% · 5d -1.2% | 64% | 39 | 0.25 | ✓ matches cascade |
| TRY TRY | SHORT | -0.9% · 5d +0.1% ↺ fades | 62% | 39 | 0.18 | ✓ matches cascade |
| NVDA NVDA | SHORT | -0.2% · 5d -1.8% | 62% | 39 | 0.17 | ✓ matches cascade |
| AUD AUD | SHORT | -0.5% · 5d -0.1% | 60% | 39 | 0.17 | ✓ matches cascade |
| High-yield credit HYG | SHORT | -0.3% · 5d -0.1% | 62% | 39 | 0.17 | ✓ matches cascade |
| US dollar DXY | LONG | +0.3% · 5d -0.1% ↺ fades | 60% | 40 | 0.16 | ✓ matches cascade |
| SMH SMH | LONG | +0.7% · 5d -0.3% ↺ fades | 59% | 39 | 0.15 | ⚠ differs |
| QCOM QCOM | SHORT | -3.0% · 5d -2.0% | 60% | 39 | 0.15 | ✓ matches cascade |
| INTC INTC | SHORT | -2.8% · 5d -2.9% | 58% | 40 | 0.14 | ✓ matches cascade |
| SPX SPX | LONG | +0.6% · 5d +0.5% | 57% | 40 | 0.12 | ⚠ differs |
| Bitcoin BTC | SHORT | -3.7% · 5d -4.5% | 57% | 30 | 0.11 | ✓ matches cascade |
Why this probability
Brutal EV price war ongoing; a tier-one bankruptcy cascading within 18m plausible, consolidation underway. A base‑rate‑anchored prior, continuously scored against what actually happens — not a forecast.