The electric vehicle market in China is experiencing a “most exciting moment” and industry consolidation is inevitable. Joining forces is an irreversible trend in the industry, says Helena Liu, a partner at the international consulting company Bain & Company, quoted by CNBC.
It is important for Tesla’s Chinese competitors to pull together as manufacturing requires high costs and constant innovation. On August 13, China’s Industry and Information Technology Minister said there were “too many” electric vehicle manufacturers in the country. The comment sparked concerns about regulatory restrictions from Beijing, which this time will target the transportation sector. Private education and tech giants have already suffered from the new rules imposed by the government.
However, Huaybin Lin, an analyst at IHS Markit, believes that the chances of Beijing’s interference in the electric vehicle industry are still very slim. According to him, the calls of the authorities for the consolidation of the automotive sector are not new and have been voiced over the past 20 years. Helena Liu agrees with this opinion. She also added that the dynamics of growth and the outlook for the sector are currently looking very positive.
China’s electric vehicle industry is indeed taking off, with tens of thousands of companies joining the industry, and stocks of manufacturers such as Nio and Xpeng soaring. Huaibin Lin and Helena Liu cannot say who will be the winner of the electric car race in China. In addition to competing domestically, Chinese manufacturers will also be battling electric vehicle industry leader Tesla and longtime players in the automotive sector. Companies such as Volkswagen, BMW and Daimler are also looking to switch to electric cars.