Between 2018 and 2020, the strong aid provided by the Chinese government, as well as the implementation of ambitious emission reduction targets, caused an avalanche of new electric car brands. An explosion that led to the birth of up to 200 new players, who now face the harsh reality of the price war that threatens to wipe out practically all of them.
According to a report by the economic service of the Japanese daily nikkeithe number of manufacturers of so-called “new energy vehicles”, that is, vehicles with electric or at least hybrid propulsion, will fall in China from the current 200, to between 5 and 8 within the next few years.
The reasons are mainly limited to the enormous pressure on prices that has arisen due to the lower demand at the beginning of the year, as well as the fall in the prices of materials, which has favored the groups with the highest sales volume.
These have been able to initiate a drop in the prices of their vehicles. Some sharp drops that have also had an effect on the demand of some consumers who are afraid to buy, and that prices will drop again in a short time.
According to analysts, only those manufacturers who have a good economic base will survive as to cushion the turbulence, and those that have a large production capacity, which facilitates the achievement of a robust economy of scale.
Estimates indicate that only those manufacturers that have a large group behind them as support will be able to stay in the market, which will lead to many mergers, and those with a production capacity of over 3 million units per year.
This will mean that in less than ten years, Of the 200 brands operating in China, there will only be eight large manufacturers at most.
One of the exceptions may be, according to Nikkei, brands such as Xpeng. One of the startups born in the heat of Chinese public aid that does not have a large volume, just 120,000 units last year. But his collaboration with the giant Xiaomi it will allow you to enjoy a higher profile and get around this riddle.
But it is clear that difficult times are coming for the groups that have not done their homework with the electric car, many of which will be able to go on to join that list of disappeared brands, and that with total security it is a trend that will extend to western markets. The question is when.