China’s electric car makers face ‘critical’ maturity period over the next two years, KPMG says
- Consolidation likely as electric car makers face tighter capital markets, end of government subsidies next year
- EV makers have yet to reach ‘true mass production’ standards
The next two years will be “critical” for China’s new energy vehicle (EV) makers as the industry matures and Beijing slashes subsidies that have encouraged consumers to adopt the technology, a KPMG executive said on Wednesday.
Philip Ng, head of technology at KPMG China, said that consolidation is likely in the industry in the next 18 months to two years, particularly as EV makers face tighter capital markets and challenges to build consumer trust in the world’s largest car market.
“All of those [new energy vehicle makers] require very large capital to fund them,” Ng said at a media round table in Hong Kong on Wednesday. “Currently, the capital market itself has become cautious on very large scale investment. There will be a mismatch between the capital available and the capital spent by the NEVs.”
Last month, the Chinese government moved to slash subsidies on new energy vehicles (NEVs) by as much as 60 per cent in hopes of encouraging the industry to boost its technology standards. Beijing, which has subsidised electric vehicle purchases since 2009, is expected to fully eliminate the subsidies next year.
Ng offered his insights as part of KPMG’s 2018 Leading Autotech 50 in China report, which was released on Wednesday.
The report identified innovative, young companies in the electric vehicle, autonomous driving, vehicle technology and ride-sharing segments. None of the companies highlighted by KPMG in its report are listed.