China’s electric car market resembles dot-com bubble

Chinas electric-vehicle market is so overcrowded, stacked with about 500 players, and it resembles the dot-com bubble, the industry’s top manufacturer warned.

There are many similarities between Chinas EV market today and the crash two decades ago, when all kinds of random companies sought to become internet success stories, Lian Qingfeng, executive vice president at Beijing Electric Vehicle Co.(BJEV), said at the company’s Beijing headquarters on Wednesday. As many as 80% of the current startups could disappear, with a big shakeout coming within a couple of years, he said.

For years, generous government policies and ample funding turned China into a mecca for entrepreneurs, transforming the country into the world’s largest market for battery-powered vehicles — by a large margin. But as the government begins to pull back on handouts and traditional carmakers get serious about making electric cars, pressure is building on many of these startups to come up with sustainable business plans.

Some of the automakers may be eliminated intensively by 2021 due to the lack of core strength such as capital shortages or the failure to pass live or die tests, Lian, 39, said.

Lian has reason to be confident. BJEV is a unit of Beijing Automotive Group Co., or BAIC, the state-owned behemoth that makes Mercedes-Benz and Hyundai cars in China. Including micro EVs, BAIC has topped China’s passenger EV market for two straight years, accounting for 19% of sales in 2018, according to estimates at Sanford C. Bernstein. Excluding those tiny cars, it ranked second after Warren Buffett-backed BYD Co.

Chinesestartups raised nearly $8 billion last year alone — only 20 to 30 vehicle manufacturers may survive, Lian said. There were 486 EV manufacturers registered in China as of March, more than triple the number of two years ago.

To gain an edge over rivals, BJEV has been exploring approaches to help consumers charge cars more easily. On top of the 75,000 charging poles designated for BJEVs customers and 2.90 lakh public charging spots nationwide, the company established 139 battery-swap stations that it said enables motorists to install fully charged packs in 90 seconds.

BJEV is working to develop more models suitable for battery-swapping, and it welcomes collaboration with other carmakers, such as NIO Inc., on that front, Lian said.

Shares of the electric carmaker BJEV rose as much as 5% in Shanghai before trading up 1.7% at 9.57 yuan as of 11:30 a.m. local time. BAIC Motor Corp., the publicly traded unit of BJEVs parent and also a shareholder of BJEV, rose as much as 3.2% in Hong Kong.

Source: thehindubusinessline