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.
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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 (electric blue) over time vs the market's (Polymarket, amber), 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. Loading the probability audit trail…
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.