New energy electric vehicle business is difficult, 90% out of the rate is why

According to foreign media reports, the Chinese electric vehicle industry, which attracts many rich investors, has more than 200 electric vehicle manufacturing companies. Faced with this situation, the government has promoted some technically unskilled companies to improve the technical standards, and consider reducing the number of electric vehicle manufacturers to about 10. An executive from the Automotive Manufacturing Industry Association said that any control measures are aimed at weakening the strong, and the government will push about 90% of electric vehicle startups out.

At present, only two new energy auto companies have been approved by the National Development and Reform Commission for vehicle manufacturing, and three others are applying for permits.

In the context of China’s declaration of war on urban smog, investors have poured more than $2 billion into the field of alternative energy vehicles, including Ma Yun, Guo Taiming, Li Ka-shing and Jia Yueting.

The government's preferential subsidy policy for new energy vehicles has also caused some hidden worries while triggering the tide of gold mining in this field. Most companies lack the knowledge and technology to make electric or hybrid vehicles, which is a far cry from Tesla and GM.

Professor Yin Chengliang from Shanghai Jiaotong University said: "There are many new members in the field of new energy vehicles. Some of them are just speculators. The government should raise the barriers to entry in the field of new energy vehicles and try to avoid low levels of irrational investment."

Overcapacity concerns

These new energy car companies are likely to face the most severe overcapacity and high inventory problems in the world's automotive sector. With the promotion of low-priced models and increased costs due to increased energy and emission standards, these automakers have to bear the pressure of shrinking profit margins.

Last year, China overtook the United States to become the world's largest new energy vehicle market (including electric, hybrid and fuel cell vehicles). According to the China Association of Automobile Manufacturers, domestic manufacturers sold a total of 331,092 new energy vehicles in 2015. The government's goal is to increase the sales of new energy vehicles to 3 million units in 2025, nearly 10 times the increase. At the same time, the government will subsidize 60% of the price of the sign. More than 4,000 models have been developed or are under development. Dong Yang, executive vice president of China Association of Automobile Manufacturers, said: "We are indeed supporting the development of new energy vehicles, but we cannot let everyone participate."

Only 10 licenses are allowed

Dong Yang has a lot of exchanges with officials. According to him, the Ministry of Industry and Information Technology is considering controlling the number of new energy vehicle manufacturers to less than 10. The above figures do not include traditional automakers such as SAIC and BYD who are also developing new energy vehicles. At present, the Ministry of Industry and Information Technology has not responded to this rumor.

Due to the government's stricter quality control measures, some start-up companies are still far away from the production line even if they have obtained production licenses. In the draft of the new energy vehicle management approach drafted this month, the Ministry of Industry and Information Technology listed 17 important technologies that new energy vehicle manufacturers must have to ensure the healthy development of the industry. These include control systems that monitor vehicle performance and stability, information systems that track the source and quality of major components, and old battery recycling technologies.

fulfill the standard

The Economic Daily, headed by the State Council, quoted an unnamed industry analyst as saying that 90% of new energy vehicle manufacturers are currently unable to meet this technical standard within two years. Beijing Electric Vehicle Group is one of the first two companies to be approved. The company is affiliated to BAIC Group and will build a plant in Beijing with an annual output of 70,000 new energy vehicles. Another lucky one is Hangzhou Yangtze River Passenger Car Company, which is listed in Hong Kong. At the time when this state-owned enterprise, which used to manufacture buses, was on the verge of collapse, Wulong Group injected capital into it, bringing the company back to life.

"big problem"

Zhang Zhiyong, an independent auto analyst from Beijing, said: "The speed of government approval has to be worrying. Many companies are starting construction of production lines, but they cannot get production licenses in time. This is a big problem."

Companies currently waiting in line for production licenses include Wanxiang Group, which has spent more than $115,000 to develop a hybrid car that uses solar energy and plans to invest $375 million in Hangzhou. The other is Jia Yueting's LeEco, which announced on the 8th of this month that it will invest 6 billion yuan to build a factory with an annual output of 200,000 new energy vehicles. The third is WM Auto, which announced on the 17th of this month that it will raise the first batch of $1 billion to launch its first model in 2018. The WM car was founded by former Volvo general manager Freeman Shen.

"chaotic" situation

Mr. Shen said: "The Ministry of Industry and Information Technology should let all applicants understand that not everyone can get permission. The current situation is somewhat confusing, and some low-speed electric vehicle manufacturers and parts suppliers are also involved."

At the same time, the government also plans to cancel the subsidy policy after 2020, dispelling the idea of ​​companies that seek to benefit from government subsidies. Wang Chen, of the China Automotive Technology and Research Center, said that the average output of China's new energy vehicle manufacturers last year was 3,000, far below the minimum output required for investment returns. Some companies and local governments are still investing in new energy vehicles and battery manufacturing in the absence of the necessary technology, further exacerbating the chaos.

A researcher from Shanghai said: "This is definitely a bubble. If you don't have core technology, you can't build your own brand. After the money is burned out, it will be out."

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