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The uncertain future for China's electric car makers

BBC Technology 27 Mar 2020 12:02
By Danny Vincent BBC News, Hong Kong
Han Zhu at the Tesla dealershipImage copyright Han Zhu

Han Zhu is on a mission to go green. The 29-year-old data analyst wants her next car to be electric. But her reasons for buying an electric vehicle are in part practical.

In the southern Chinese city of Shenzhen, government restrictions on the number of petrol cars sold each year mean she would have to enter a lottery or auction to be able to buy a petrol vehicle.

"There is a possibility you may never get it. With the electric vehicle green licence, you don't have to wait in line," she says.

Shenzhen has become the showpiece capital for the Chinese electric dream. In 2017 it became the first city in the world to introduce a fleet of electric buses. A year later, the government rolled out a plan to replace city taxis with electric cars.

"In Shenzhen, in almost every residential building there are two charging units. One out of 10 cars on the street are Teslas," she says. "In China if the policy leads in one direction, technology and money goes in that direction too," she says.

Image copyright Getty Images

Beijing invested an estimated $50bn (£43bn) in the industry, hoping that today's dominance of the electric vehicle market would lead to global automobile supremacy tomorrow.

But that breakneck expansion alarmed the government. Last year it decided to put the brakes on by withdrawing approximately half of its financial incentives for buyers.

Now the coronavirus has supplied a second punch.

Overall auto sales in plunged 79% in February compared with the same month in 2019, according to figures from the China Association of Automobile Manufacturers. Sales of new energy vehicles (NEVs) fell for the eighth month in a row.

"The vast majority [of electric car makers] will not survive. But how long they survive and whether industry consolidation occurs through lots of mergers or bankruptcies will depend on the willingness of the government."

After listing on the New York Stock Exchange in 2018 and raising billions of dollars, NIO is perhaps the highest-profile Chinese maker of electric cars.

"China is a huge market growing at an immense pace. We will adjust and adapt to the market condition," said an NIO spokesperson.

In 2018 CATL, a Chinese electric battery maker, became the official supplier of BMW's electric cars.

Image copyright Getty Images

"Chinese auto and battery technology is still not world-class. CATL and BYD are strong battery makers, but they are still somewhat behind technologically from their South Korean and Japanese counterparts. And Chinese automakers are still second-class producers even in their own country and they have barely any sales outside China," says Mr Kennedy.

Yi Zhi Yong, a middle-aged entrepreneur, drives a hybrid car made by Chinese manufacturer BYD. Backed by US billionaire Warren Buffett, the company was the third-largest battery-only electric car producer in the world in 2019, according to research by EV-volumes.com. Tesla sold the most, followed by another Chinese firm, BAIC.

"The quality of domestic pure electric vehicles is not good at the moment," he says. "No domestic pure electric vehicle is worth buying yet."

Back in Shenzhen, Han Zhu says the rolling back of government subsidies won't put her off buying an electric vehicle. But rather than buying a Chinese marque, she has her eye on a Tesla.

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ShenzhenChinaHan ZhuCATLChina Association of Automobile Manufacturers
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