China began cutting back its electric car incentives dramatically early this year. The results have been predictable, as sales of EVs have plummeted. BYD reported its earnings in the 3rd quarter were off a whopping 89%.
According to China Association of Automobile Manufacturers the sales of electric, hybrid, and fuel cell cars plunged by over 45% in October, marking four straight months of declines in the sector.
To make matters worse, government officials in China are talking about lowering EV incentives even further, although the precipitous drop in the sale of new energy vehicles has caused some hesitancy to proceed with those further cuts.
Still, the country wants 20% of all new car sales to be NEVs by 2025, which means nearly 7 million sales a year by that date. By some estimates, the Chinese new car market could be as large as 40 million vehicles a year in the near future.
Currently, China finds itself with 486 new energy vehicle manufacturers.
Many of them are churning out useless crap that sits unsold in vacant lots. Others are priced cheaply enough to attract buyers but are of such low quality they give the entire segment a bad name, which isn’t good for future business.
China is determined to promote the survival of the fittest while eliminating the charlatans who are only in it to collect the lucrative government incentives on offer.
And that is why may be, China has left the door wide open for foreign manufacturers like Tesla and Volkswagen, both of which have begun producing electric cars in new Chinese factories in the past few weeks.
60 years ago, imports from Japan, Germany, and the UK forced US manufacturers to learn how to make smaller, more efficient cars. Now foreign manufacturers may show the Chinese how to build affordable electric cars.
Reference- CNN Business, Clean Technica