From Wolf Street:
China EV Manufacturing Bubble Faces Getting Bludgeoned
There are now 486 EV manufacturers in China, triple from two years ago. Most will disappear.
New vehicle sales in China plunged 14% in the first quarter from a year earlier, according to the China Association of Automobile Manufacturers today. For the whole year 2018, new vehicle sales had dropped 4.1%, the first such drop in modern data going back to 1990....MUCH MORE
Despite this historic slump, sales of “electrified” vehicles (battery-electric EVs, plug-in hybrids, and fuel cell vehicles) soared 85% in March compared to a year ago, and 110% in the first quarter, to nearly 300,000 units: 227,000 EVs, 72,000 plug-in hybrids, and 273 fuel-cell vehicles.
Last year, sales of EVs and plug-in hybrids had surged 62% to 1.255 million vehicles, reaching a record 5.3% of total vehicle sales. Of them, a whopping 14,467 were Tesla’s, according to the Ministry of Industry and Information Technology, giving it an EV market share of a minuscule 1.1%.
Sales of electrified vehicles in China are on track to reach 1.6 million units this year, for a share of around 7% of new vehicle sales – on the basis that sales of vehicles powered by internal-combustion-engines (ICE) will continue to slump, while sales of electrified vehicle are surging.
The EV industry in China has been powered by government subsidies. China has been heavily promoting EVs for two reasons: To help reduce often enormous air pollution in big Chinese cities; and to create the world’s dominant EV industry.
Chinese government policies are also attempting to create the world’s dominant EV battery-cell industry. And so far, so good. Here are the largest makers of battery cells for EVs:
But the subsidies that caused a tsunami of private-sector investment to pile into the battery-cell boom in China are being whittled down, and the weaker battery-cell makers are expected to be culled.
- China’s CATL.
- Japan’s Panasonic
- China’s BYD, which also makes EVs.
- Korea’s LG Chem
- Korea’s Samsung.
- through 10: Chinese manufacturers.
And so too, the government is now reducing the subsidies for electrified vehicles, with some subsidies that were $7,500 per vehicle are being cut in half.
This comes at a bad time for the EV industry: Though sales have boomed, EV startups have mushroomed even faster.
There are now – take a deep breath — 486 registered EV manufacturers in China, having more than tripled in two years. They have attracted billions of dollars in investment...
