Beijing once again urges consolidation in saturated electric car industry to avoid fragmentation and wasted resources
- The world’s largest automotive market has more than 500 NEV assemblers that develop and build vehicles to compete against internal combustion engine makers
- Sector has been gripped by an investment craze amid Beijing’s ambitions of achieving its carbon neutrality goal by 2060
China’s ministry overseeing manufacturing sectors has issued an ominous warning against overcapacity in the country’s new electric vehicle (NEV) segment, saying the issue could cripple the industry’s long-term growth.
Xiao Yaqing, Minister of Industry and Information Technology, told a press conference in Beijing on Monday that the authorities would encourage consolidation in the NEV sector to avoid a waste of investment and resources.
“NEV companies are encouraged to conduct consolidation through market forces as they seek to grow big and strong,” the minister said, according to state-run news site China.com.cn. “We must understand that the new-energy vehicle is a technology-intensive industry and a concentration of resources is advisable. A fragmented NEV industry should be averted.”
NEVs comprise pure electric, plug-in hybrid and fuel-cell cars.
In China, pure electric cars currently have 78.9 per cent of the NEV market; plug-in hybrid vehicles have a 21.1 per cent share while fuel-cell cars account for less than 0.1 per cent.
The world’s largest automotive market has more than 500 NEV assemblers that develop and build vehicles to compete against internal combustion engine (ICE) manufacturers. They build cars all the way up from a mini EV that costs less than US$5,000 with a driving range of less than 200 kilometres, to a Tesla high-performance Model Y with a price tag of US$60,000.