In a time when electric vehicles are growing at the fastest rate in the world, the Chinese government has stressed the need to reduce the number of electric vehicle-related companies.
Mergers and acquisitions in the sector are likely to increase as a result of the move. At least 400 electric vehicle manufacturers are estimated to be operating in China, and 100 of the world’s 140 electric vehicle battery plants are located there.
According to CNBC, a U.S. business media outlet, China’s minister of industry and government said that there are “too many” electric car companies in China. Foreign media outlets such as CNBC interpreted the announcement as an indication that the Chinese government was actively encouraging related companies to merge.
According to the World Economic Forum (WEF), plug-in hybrid vehicles (PHEVs) accounted for 6.2 percent of passenger cars sold in China last year, which is still small compared to Europe. However, sales of pure electric vehicles (BEVs) and PHEVs in China rose 197% in the first half of this year, the fastest growth in the world.
In China, the state is taking the lead in developing electric vehicles by actively reflecting the characteristics of socialism. The Chinese government has increased the proportion of electric vehicles from 20% to 25% by 2025. erected
To this end, the policy of subsidizing the purchase of electric vehicles has been extended for two years until 2022, and the sales tax has been abolished. Subsidies are provided for the sale of low- and medium-cost new energy vehicles in rural areas.
Nio, regarded as China’s Tesla, has unveiled a “ET7” luxury sedan model priced at 448,000 yuan ($70,000), including a battery pack. The company also doubled the electric vehicle production capacity of a joint venture in Hefei, Anhui province. Nio plans to increase the production capacity of its flagship electric vehicles “ES6” and “ES8” to 120,000 units per year.
In addition to Nio, BYD, Xiaoping, and Li Xiang are also aggressively pursuing Tesla. Information and communication (IT) giants Alibaba and Baidu are partnering with Shanghai Motors and Geely Motors to target the electric vehicle market. Tencent has entered the electric vehicle market through its investment in Nio. Geely Motors and Foxconn, Taiwan’s largest original equipment manufacturer (OEM), have established a joint custom manufacturing business.
Also announcing its entry into the electric vehicle market, Xiaomi plans to sell 900,000 electric vehicles over the next three years.
In China, where the electric vehicle market is booming, the battery price is expected to drop to 500 yuan ($77) per kilowatt-hour (KWh) by 2025. Sales of new energy vehicles in China reached a record 217,000 units on a monthly basis in May, according to the China Association of Automobile Manufacturers.