China cancels incentives for electric cars because of overproduction in the industry

In China, the crisis of overproduction of electric vehicles — a rare case when the state proved to be too effective. According to forecasts, the production of electric vehicles by 2020 in 10 times exceeds the goal.

Now the Chinese government immediately revokes the benefits, and the implications of this decision will affect the entire global automotive industry. The leadership in the production of electric vehicle — one of the components of the strategy is Made in China 2025. The authorities stimulated the development for many years due to a number of benefits and limitations. For example, buyers of electric cars can expect to be compensated up to 100,000 yuan, and registration number for a petrol car to was much more complicated. Encouraged, of course, and manufacturers.

As a result of this unique situation: the development of the industry has engaged hundreds of startups, and those that have reached a modicum of success, received a huge investment, for example, the brand Xpeng estimated at $4 billion, when the company still did not have its own production capacity.

Startup NIO officially entered the U.S. stock market with an IPO of $ 1 billion to expand production of its electric vehicles

Fitch experts predicted that by 2020, China will produce 20 million electric cars is 10 times more marked in terms of Made in China 2025 goal, which even then was called “ambitious”.

In 2018, mainland China, sold 1.3 million vehicles with electric drive, the sector grew by 61% decline in the car market as a whole by 2.1% compared to the previous year.

Now benefits cut and this will be reflected primarily on new startups. Officials agreed that the car company will get permission to build a new plant only if produces more than 100 000 electric cars per year, and start-UPS and foreign companies to obtain permission needs to sell at the time of filing of 30,000 vehicles worldwide in the amount of $443 million at least.

Until now no restrictions on the volume of production or sales was not, and declared the policy of restriction means that any new market players will have to rent capacity from the current industry leaders. Thus, most of the announced projects in the country will not be implemented.

One of the latest to enter China had a Tesla. The construction of the Gigafactory 3 in Shanghai began in early January, the production capacity of the enterprise at the initial stage will be 3 000 cars / week with increase in the issuance of up to 500,000 electric vehicles per year.

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