Minister said China will support overcrowded electric car industry

“Most of the companies are small and scattered,” the minister said of the country’s electric car industry. “The role of the market must be fully utilized and we encourage consolidation and restructuring efforts in the electric vehicle sector to increase market focus.”

China, which has built its electric car industry to become the world’s largest, is placing a new focus on boosting the ranks of electric car makers that have swelled to about 300. The government is crafting measures to curb overcapacity in the sector and direct resources to a number of key production hubs, Bloomberg reports. News last week, citing people familiar with the matter.

Regulators are considering setting a minimum capacity utilization rate for the industry, and counties that don’t meet that will not be allowed to approve new projects until excess capacity comes online, Bloomberg reports.

The focus on moving the electric car industry to a more sustainable place comes as China rocks an array of industries from teaching to ownership to big tech in President Xi Jinping’s quest to reshape the country’s economy and society.

The rapid growth of the electric car market in China has been driven by government subsidies to encourage consumers to switch to cleaner cars. Data from the Ministry of Industry and Information Technology showed that the central government’s total support for new energy vehicle purchases reached 33 billion yuan ($5.1 billion) in the five years to 2020.

In response, local authorities have offered tax breaks and other incentives for electric car manufacturers to set up shop, which has increased capacity. Jiangsu Province, north of Shanghai, for example, is now home to about 30 auto manufacturers, many of whom are bankrupt.

The average capacity utilization rate of China’s automakers overall averaged about 53 percent last year, according to calculations based on Jiangsu Province’s submission to the National Development and Reform Commission earlier this year. China has about 300 electric car manufacturers, according to a Xinhua report in April that cited official statistics.

Reuters and Bloomberg contributed to this report.


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