Electric car news
The Chinese market of electric vehicles is experiencing spectacular growth, but this expansion now raises concerns at the highest level of the state. President Xi Jinping himself openly questions the need for each province to invest massively in this industry. This questioning marks a turning point in the Chinese strategy, so far focused on all -out growth in the electricity sector.
The multiplication of manufacturers and models available on the Chinese market today reaches vertiginous proportions. Practically every week sees a new brand or a new model born, all in search of the attention of a limited number of Chinese consumers. This proliferation raises the fundamental question of long -term economic viability of so many players on the same market, even as large as that of China with its 1.4 billion inhabitants.
A destructive prize war for the ecosystem
The strategy adopted by many Chinese manufacturers is to continuously lower their prices to eliminate competition. This Darwinian approach to the automotive market, led in particular by the giant byd, exerts considerable pressure on the entire supply chain. Suppliers and partners undergo incessant cost reduction requests, sometimes compromising their own financial health.
This price war has certainly enabled the emergence of particularly accessible electric vehicles, such as BYD Dolphin Surf proposed to € 8,000 in China And less than 20,000 euros with us. Nevertheless, this accessibility is to the detriment of the most fragile actors in the sector. Many suppliers complain about chronic delays in payment, some are not even settled within the agreed deadlines. Faced with this situation, Chinese manufacturers have recently agreed to establish a standard payment calendar of 60 days for their suppliers.
Government intervention is becoming clearer
Chinese authorities do not intend to stop at these self -regulation measures. The official news agency Xinhua reported a meeting between senior government officials, during which more strict price regulation measures were mentioned. Officials now call to put an end to “irrational price reductions”, defined as the practice of deliberately selling below the cost to gain market share.
This approach, described as predator by the authorities, could now be the subject of direct government interventions if it persists. The Chinese government seems to be determined to preserve a healthy competitive environment, even if it means to temporarily restrict the growth of the sector.
Xi Jinping questions local investments
The most striking criticism emanates directly from President Xi Jinping, which has been particularly severe towards several emerging technologies, including the development of electric vehicles. Its rhetorical question-“must all the country’s provinces develop industries in these directions?” – perfectly sums up the current concerns of central power.
This question specifically targets the massive investments of local governments in the automotive industry. These communities, anxious to energize their regional economy, have multiplied financial support to local manufacturers, fueling a phenomenon of Industrial overcapacity. The result is an economic landscape where too many factories coexist for insufficient demand, creating a major structural imbalance.
The challenges of upcoming consolidation
The current situation reveals a fundamental contradiction: despite a domestic market in 1.4 billion potential consumersthe economic space remains insufficient to absorb all the actors present. Many brands of electric vehicles are struggling to achieve profitability, only surviving thanks to public subsidies and continuous investments.
The signals sent by the central government suggest a desire to rationalize this sector which has become plethoric. The consolidation of brands, initially planned as a natural process of market development, could be accelerated by government measures. This forced rationalization aims to preserve the long -term competitiveness of the Chinese industry of electric cars on international markets.
The Chinese approach thus evolves a logic of quantitative growth towards a search for quality and economic sustainability. This transition probably marks the end of an era of unbridled expansion and the entry into a more thoughtful industrial maturation phase. Manufacturers will now have to demonstrate their real economic viability rather than their sole ability to attract public funding.
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