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Electric Cars Are Hot In China, But Market Might Be Ready To Collapse

Electric Cars Are Hot In China, But Market Might Be Ready To Collapse

China’s electric car market is so hot that experts say it’s a bubble fit to burst.

Nowhere on Earth has the electric car found its home than in China. China is crazy for EVs, with more electric vehicles sold in China today than anywhere else in the world. Billions upon billions have been invested in electrified vehicles by everyone, from tiny tech startups looking to be the next big thing to big business magnates that normally sell real estate.

A lot of that investment was encouraged by big government subsidies that could take thousands off the sticker price of a new EV and let startups and big business alike save millions off the price of a new factory. But those subsidies are going the way of the dodo, and this has some analysts concerned.

According to a new report from Bloomberg, there are current 486 electric vehicle makers in China currently. That’s about three times as many as just a few years ago. Total EV sales are projected to be over 1.6 million by the end of this year, and that’s not enough to justify all the production capacity China currently has.

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If you combined all of the 486 registered EV makers in China now, you’d get about 3.9 million vehicle production capacity. This means that no matter how you shake it, either some factories are going to make cars that nobody will buy, or some factories will simply sit idle. More likely both.

via Ultra Lithium Inc

The Chinese government subsidized the industry for years in the hopes that it would cut down on China’s legendary air pollution while also reducing the country’s reliance on oil imports. While EVs have helped, they still only account for 4% of the overall automotive market, and many are concerned that as the government reduces incentives to purchase a new EV, that number won’t increase.

Experts believe that many of the Chinese carmakers currently making electric cars are doomed to fail as the subsidies are removed. Foreign competition is also expected to take a bite out of domestic firms, further aggravating the situation. The EV market is set to collapse in on itself, and nobody is sure what that’s going to mean for the electric car in China.

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