December 6, 2021

The Japan Herald

About Japan, Global Green Energy and Space Market

Inside the sector, how is it that China has more electric vehicle companies than it can count?

2 min read

Interestingly, no one knows how many electric vehicle manufacturers exist in China today. Estimates say 300, but the landscape is changing too quickly for bystanders to keep up with the speed and magnitude of investment as corporations push in to gain from the world’s largest car market’s exclusive emphasis on minimizing its oil dependency. However, the boom is likely to come to an end, with the government now stepping in.

“We have many EV enterprises on the market at the moment now,” said Xiao Yaqing, China’s minister of industry and information technology, last month. In the EV sector, we support merger and restructuring initiatives.” Of fact, in China, the government gets what it wants, and the stock prices of any of the top 10 EV manufacturers in the country sank as a result of those remarks.

To different people, sustainability means different things. In China, the emphasis is on leveraging the transportation revolution to create profitable EV mega-brands at home and, eventually, internationally. It’s more likely that they create EVs because it’s a convenient opportunity to exploit than because it’s a way to help the environment.

Is it possible for them to succeed? Sure. Consider how far Chinese automakers have come in the last decade, and not only with EVs. While there are a variety of reasons for their decline, the -60 percent drop in Kia and Hyundai sales over the last five years, as well as the -93 percent drop in Citroen and Peugeot sales since 2014, demonstrates both how rapidly the market can transform and how easily, at least in the mid-market, buyers can be influenced to domestic makers.

These proceeds from domestic sales will be used to fuel international goals. Who will be the most successful? The Chinese automobile industry is far too large and complex to make reliable predictions, but it’s impossible to ignore the fact that Great Wall (with Wey), SAIC (with MG), Nio, and Geely (with Lynk&Co) already are preparing the groundwork in Europe. When you include in multibillion-dollar investments from tech companies like Xiaomi (China’s Apple) and Zhiji (a SAIC-Alibaba joint venture), the number of viable challengers quickly expands.

In a market now plagued by overproduction and razor-thin margins, the notion that this category alone would contribute 10-15% more enterprises to those already here is frightening. Can they truly make a name for themselves in a market where Honda is struggling?

Xiao’s desire for centralized megabrands makes complete sense in this perspective. Much will depend on obtaining a competitive advantage (more likely in connection or battery technology) or a price advantage – something China has historically dominated, but with little regard for everything from labor, conditions to impact on the environment. China has no intention of diluting its likelihood of succeeding through excessive competition.

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