China’s new energy sector – which has been embroiled in a vicious price war – is set for a brutal “three-year elimination contest” that more than three-quarters of firms are unlikely to survive, industry insiders said.
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The statement came as China’s top leadership vowed to stamp out the cutthroat competition plaguing swathes of the economy during the “two sessions” – the annual meeting of the country’s top legislative and consultative bodies in Beijing.
China’s electric car market is already rapidly consolidating. In the late 2010s, there were more than 400 car makers in China, according to domestic media reports. Now, that figure has declined to about 40 – and is still shrinking.
“There is one going offline every two months,” said He Xiaopeng, founder and CEO of electric car maker Xpeng Motors, at a press conference on the sidelines of the “two sessions” last weekend. “This ongoing process of mergers and acquisitions is exceedingly fast.”
In just the past two years, high-profile electric car brands such as WM Motor and HiPhi have filed for bankruptcy, while others including Jiyue – backed by the tech giant Baidu – have been forced to scale back their operations.
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According to He, the wave of closures is likely to continue for several more years. It’s possible that “fewer than seven” brands will ultimately survive, he added.