Electronics and Semiconductors

Is consolidation coming for China electric vehicle makers?

14 September 2021

The Chinese government is planning to encourage consolidation in its electric vehicle (EV) market, fearing too many companies will cause unwanted competition and higher prices for consumers.

According to a report by CNBC, Chinese Industry and Information Technology Minister Xiao Yaqing said the country is also looking to improve its charging network and develop EV sales in rural markets moving forward.

The promotion of EVs in China is designed to cut pollution in the country as well as curb climate change.

The market for EVs has exploded since the beginning of the year with nearly all major automotive OEMs vowing to switch to primarily sell EVs by 2030. This huge change will impact all aspects of the automotive market including the need to build a vast EV charging network globally.

As Tesla Motors increased in popularity and consumers showed interest in EVs, a cottage industry of EV startups emerged globally and in China, the world’s biggest vehicle market, companies sprouted to take advantage of the new segment of the automotive market.

Now, it appears as if the Chinese government will look to curb the number of companies offering vehicles to the market domestically, which will have to compete against all major car makers that are making a push into China, where the volume in the market is forecast to remain for the foreseeable future.

However, the situation is also problematic in China as it is in the rest of the world as the global chip shortage is causing automakers to cut production and offer renewed revenue estimates. The chip shortage has hit the automotive segment particularly hard.

Earlier this month, General Motors said it would temporarily idle nearly all of its assembly plants in North America and in July German carmakers temporarily shut down production of vehicles due to the problems in the supply chain. Ford also recently said its profits were expected to dip 50% less than what the company generated last year.

In the report, Xiao said the government was looking to find solutions to address the automotive chip supply shortage but did not detail what the plans are specifically. However, last week the government fined three semiconductor making companies for driving up prices of auto chips to help auto production.

To contact the author of this article, email PBrown@globalspec.com

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