SAIC-GM-Wuling Automobile Co. electric vehicles plugged into charging stations at a roadside parking lot in Liuzhou, China on Monday, May 17, 2021.
Kilai Shen | Bloomberg | Getty Images
BEIJING – As investors saw the stock prices of Chinese electric car makers such as Nio and Xpeng rise dramatically, thousands of companies jumped on the bandwagon as the industry grew, according to the Kichacha commercial database.
Kichacha said in a report that the number of new Chinese companies related to “new energy vehicles” rose from 81,000 by mid-August of this year, bringing the total to more than 321,000.
The database showed an increase this year after 78,600 companies entered the industry in 2020 at the height of the coronavirus pandemic in China.
New energy vehicles refer to a general category that mainly includes pure electric and hybrid cars. China is the world’s largest auto market and wants 20% of new cars to be sold as new energy vehicles by 2025.
Shares of major electric car makers fell on Monday following signs from China’s Ministry of Industry and Information Technology.
“Our businesses must be bigger and stronger,” Minister Xiao Yaqing said at a press conference.
According to CNBC’s translation of the Chinese transcript, the minister said, “At present, the number of new energy vehicle enterprises is huge and is in a small and scattered state.”
“It’s just version 2.0 of the central government that wants to cut corners [number] as entrants they did so when they limited the manufacturing license [and] allowed in 2017, ”said Tu Le, founder of Beijing-based consulting firm China Auto Insights.
“They probably have [saw] Capacity Building [and] Too many brands that will not be able to compete in the market with the product, ”he said. “This has often happened in the Chinese market across all industries and leads to a race to the bottom where companies compete only on price. Eh. It puts the whole industry to the test because these non-competing companies are happy to throw the good money after the bad. “
Tu said he expects China’s major electric car makers Nio, Xpeng Li Auto and BYD, backed by Warren Buffett, to benefit from efforts to strengthen the industry “because it will eliminate potential competitors. and perhaps will increase them “. will allow a team or a technology to acquire their product.