06/26/2022

China Has 487 Electric-Car Makers, and Local Governments Are Clamoring for More

There are now 487 electric-vehicle makers in China, according to the latest official tally, and most are brand new. In June, the National Development and Reform Commission and China Construction Bank announced a new $47 billion fund for EVs and other high-tech industries. Regional governments are making similar funding commitments. Direct government subsidies on electric-vehicle sales have totaled $15 billion over the last five years.

Singulato Chief Executive Shen Haiyin estimates that just 10% of today’s EV startups will survive the next five years. Some auto analysts put the figure nearer to 1%.

“A lot of capital is being invested in this industry,” said Paul Gong, an analyst at UBS. “A lot of it will be wasted.”

Lured by the prospect of handouts, many companies have concluded that “simply giving it a shot and receiving government support can be a reasonable business model, even if they never put an electric car on the road,” said Scott Kennedy, of the Center for Strategic and International Studies. “The moment of truth will come when China’s national and local authorities have to decide whether to let the losers fail or keep them afloat.”

View Article
Site has paywall