China’s booming EV industry faces overcapacity issues and this will see consolidation and closures, analyst says
- The accelerated pace of electrification on the mainland’s roads has attracted about 500 companies, investing tens of billions of dollars into developing EVs
- Consolidation looms as the strongest start-ups and conventional carmakers up their EV game with new models, knocking out weaker competitors
China’s electric vehicle (EV) industry, growing fast amid strong take-up of the new technology, will likely face a period of excess capacity in the near-term amid a glut of unwanted cars from some underperforming manufacturers.
The industry is set for a period of consolidation and closures as the strongest start-ups and conventional carmakers up their EV game with new models to outdo weaker competitors, said an industry expert on Tuesday.
“The market outlook is bright but that is not enough to ensure that every player can become a winner,” said Chen Jinzhu, chief executive of Shanghai Mingliang Auto Service, which offers vehicle maintenance services and sells second-hand cars. “Billions of yuan will be wasted as some underperforming companies are edged out [from the market].”
The newspaper warned that the country’s EV industry faces severe overcapacity in the coming years, as the industry shows signs of overheating. Total EV deliveries in China, the world’s largest automotive market, hit 1.17 million units in 2020, up 12 per cent year on year.
