China’s EV war: only the strongest will survive as BYD, Xpeng’s dominance knock out 15 pretenders amid supply glut

Total Capital raised has exceeded 100 billion yuan, and the national sales target of 6 million units set for 2025 has already been exceeded

At least 15 once-promising EV start-ups with a combined annual production capacity of 10 million units have either collapsed or been driven to the verge of insolvency

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Published: 10:00am, 7 Oct 2023Updated: 10:35am, 7 Oct 2023

Vincent Kong waves a soft-bristled brush as he removes dust from his WM W6, an electric sport-utility vehicle whose purchase he has regretted since the time the carmaker’s fortunes took a turn for the worse.

“If WM were to close [due to a financial squeeze], I would be forced buy a new [electric] car to replace the W6 because the company’s after-sale services would be suspended,” said the Shanghai white-collar clerk, who spent about 200,000 yuan (US$27,782) when he bought the SUV two years ago. “More importantly, it would be embarrassing to drive a car built by a failed marque.”

Founded in 2015 by Freeman Shen Hui, former CEO of Zhejiang Geely Holding Group, WM has grappled with financial problems since the second half of 2022 and suffered a blow in early September this year when its US$2 billion reverse-merger deal with Hong Kong-listed Apollo Smart Mobility collapsed.

WM is not the only underachiever in China’s white hot EV market, where as many as 200 licensed carmakers – including the assemblers of petrol-guzzlers who are struggling to migrate to EVs – are battling to gain a foothold. In a car market where 60 per cent of all new vehicles will be electric by 2030, only the assemblers with the deepest pockets, the most dazzling and most frequently updated models, are expected to survive.

This trickle of exits is threatening to turn into a flood with at least 15 once-promising EV start-ups with a combined annual production capacity of 10 million units having either collapsed or been driven to the verge of insolvency as bigger players gained market share, leaving smaller contenders like WM to fight for scraps, according to calculations by China Business News.

WM Motor’s W6 EV model. “If WM were to close [due to a financial squeeze], I would be forced buy a new [electric] car to replace the W6 because the company’s after-sale services would be suspended,” said a W6 car owner. “More importantly, it would be embarrassing to drive a car built by a failed marque.” Photo: Handout

EV owner Kong admitted that the 18,000 yuan (US$2,501) government subsidy, exemption from consumption tax which could save over 20,000 yuan and a free car licence plates which entailed a 90,000 yuan in savings, were the key reasons for his purchase decision.