China Has Too Many Mediocre Electric Carmakers, Researcher Says

  • Government tasked research center with sector review
  • Rush into new-energy vehicles has worsened overcapacity

China’s electric-vehicle industry is plagued by too many small companies that lack the know-how to compete on the global stage, according to a government think-tank tasked with helping formulate automotive policy.

Despite having more than 200 manufacturers of new-energy passenger vehicles, buses and special-use vehicles, China still lags behind global leaders in terms of quality, reliability and key technology, said Wang Cheng, an official at the China Automotive Technology and Research Center. Battery suppliers similarly lack competitiveness, said Cheng, whose group was asked by the government to review the sector.

The assessment, coming amid a probe into government funding fraud, may presage a rethinking by policy makers in the way it promotes electric vehicles. Generous subsidies have caused a rush by local governments and companies to invest in new-energy vehicle projects. Instead of spurring development, the handouts have instead reduced the urgency for automakers and battery suppliers to develop higher-quality products.

Only about a quarter of the more than 4,000 approved new-energy vehicle models are in production, according to Wang. Last year, the average electric carmaker produced about 3,000 vehicles a year, far below the scale required to ensure returns on investment.

The situation is similarly dire with battery makers, with more than 200 manufacturers supplying to automakers, most of them unable to compete with global suppliers, Wang said at a briefing in Beijing. Most companies in the industry have problems keeping their factories running at capacity and have insufficient product-development and marketing capabilities, he said.

The central government set up the research center in 1985 as the official body to study and formulate automotive industry policy.