"By some counts, there are over 100 electric vehicle (EV) companies in China. People who watch the industry closely believe that only a very small number will survive. Those in trouble have even stopped paying their suppliers. The argument about the future of Chinese car companies is simple. Government policy helped almost all these companies launch into the world's largest market for EVs."
"The Chinese government now sees its policies have triggered a problem. There are too few EVs sold to support 100 companies. Part of the nightmare the government began is that many of the companies have had to cut prices to be competitive at all. They may be able to sell cars, but they lose money on each sale. Companies from Europe and Japan have also found that what was once a profitable place to sell cars is no longer."
Over 100 EV startups launched in China after government policies expanded the world's largest EV market, creating severe oversupply. Many companies cannot sustain operations, have cut prices to compete, and in some cases stopped paying suppliers. The oversupply has also driven foreign automakers from Europe and Japan to retreat or reduce operations. Tesla's Shanghai factory increased Model 3 and Model Y deliveries by 22.6% month over month in August, suggesting profitability in China. Tesla holds roughly 5% of new EV market share in China, positioning it to survive consolidation while local leader BYD shows signs of slowing sales.
Read at 24/7 Wall St.
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