China, here is the government plan for the electric car industry
China will encourage mergers between electric car manufacturers to consolidate the sector. Is Beijing preparing for a new competition with the United States? All the details
During a press conference in Beijing today, China's Minister of Industry Xiao Yaqing said electric vehicle companies “should get bigger and stronger. We have too many electric vehicle companies on the market right now ”.
His words have been interpreted as the foreshadowing of a new government intervention in a private sector – after the squeeze on technology , above all – to rationalize it and, in this case, consolidate it.
"WE ENCOURAGE MERGER EFFORTS"
The companies that make electric vehicles, Xiao said, “are mostly small and scattered. The role of the market should be fully utilized and ”, he added,“ we encourage merger and restructuring efforts in the electric vehicle sector to further increase market concentration ”.
CHINA'S PLAN FOR ELECTRIC CARS
China's electric car industry is the largest in the world: there are around 300 different manufacturers. Based on information received from anonymous sources, Bloomberg writes that the government is developing a series of measures designed to contain the industry's overcapacity and to channel resources to a precise number of key manufacturing centers.
Specifically, the Chinese authorities are thought to introduce a minimum capacity utilization rate for the voting vehicle industry; provinces of the Chinese territory that do not respect it will not be able to authorize new projects until the excess automotive capacity is deployed.
HOW ARE THE SHARES OF CHINESE COMPANIES GOING
After Minister Xiao's statements, the shares of Chinese electric vehicle companies plummeted. Xpeng, for example, lost up to 3.2 percent on the Hong Kong stock exchange; Li Auto up to 1.8 percent. In mainland China, on the other hand, BYD fell by 2.1 percent and BAIC by 5.2.
CHINESE AIDS TO ELECTRIC CARS
The growth of the Chinese electric car market has been encouraged by government subsidies offered to citizens to encourage the transition to low- or zero-emission cars. From 2015 to 2020, subsidies for the purchase of new energy vehicles (a term that includes pure electric cars, plug-in hybrids and hydrogen cars) allocated by the central government of Beijing amounted to 5.1 billion dollars.
In addition to these, there are the tax breaks and other incentives offered by the various provinces to the producers of electric vehicles to encourage them to install production capacity on their territory. However, this approach has led to overcapacity: in the province of Jiangsu, for example, north of the city of Shanghai, there are about thirty electric vehicle companies, several of which are bankrupt.
THE NUMBERS
According to Bloomberg estimates, the industry's minimum capacity utilization rate in China in 2020 was around 53 percent.
CLASH WITH THE UNITED STATES?
Beyond companies in bad financial situations, some Chinese manufacturers such as NIO and BYD have also made themselves known overseas.
For the time being, however, Chinese brands don't have the same appeal as American brands like Tesla. However, in the near future, a competition between the United States and China on exports of electric vehicles, which will be increasingly widespread in the world in parallel with efforts to reduce greenhouse gas emissions, cannot be ruled out.
After the one on 5G technologies, the next chapter of the trade-technological war between Washington and Beijing could focus on vehicles with new energies. Joe Biden's administration is focusing heavily on developing other "sustainability" industries – solar panels and batteries , first and foremost – precisely to narrow the manufacturing gap with China and prevent the ecological transition from benefiting America's biggest rival.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/smartcity/cina-auto-elettriche-industria-consolidamento/ on Mon, 13 Sep 2021 13:37:10 +0000.