The Electric Car Industry is Reaching New Heights in China
The increasing issue of climate change has become a serious concern for everyone. States are taking measures to reduce their carbon footprint and switch to environment-friendly alternatives in order to play their part in preventing further deterioration of the environment.
However, states are not alone in this race. Another major stakeholder is the multinational corporations that have played a great role in the damage caused to the environment, as scientists continue to warn everyone about the devastating effects of climate change.
A Rising Change
The auto industry in China is beginning to revolutionize and take on a new challenge in order to provide their customer base with “new energy vehicles” that are based on electricity. This electric car industry is on the rise and reports have shown that the industry is showing no signs of stopping anytime soon. These businesses in China have grown by 81,000 in the year 2021 resulting in a net total of 321,000.
Trouble in Paradise
The industry of new energy vehicles is giving rise to a new type of vehicle that is purely based on electric power and vehicles that are based on hybrid power. While China leads the race for being the world’s largest market for automobiles, it also plans on turning the sale of new energy cars to 20% by the year 2025. However, recently, the industry faced an obstacle as the shares of major electric car manufacturers fell when China’s Ministry of Industry and Information Technology chimed in.
Minister Xiao Yaqing stated that the businesses need to enter into the consolidation phase where competitors in the same industry begin to merge together in order to gain a large portion of the market share and get the advantage of synergies. He also commented on the rising number of vehicle businesses and stated that they are small businesses in large numbers and scattered form.
Some Win, Others Lose
Tu Le, the founder of a Beijing advisory firm called Sino Auto Insight, talks about the situation stating that this increasing number has led to the buildup of many competitors that are bringing their products into the market and the Chinese market is no stranger to this phenomenon. He added that while there is negative sentiment surrounding the potential consolidation, leading electric car companies like Nio, Xpeng Li Auto, and BYD will benefit from it as they won’t have to worry about more competitors.
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