Nio Exec Says China’s Dozens Of EV Startups Will Dwindle To 3 In 5 Years

2 months ago by Mark Kane 3

The boom of the “New Energy Vehicle” sales (think plug-ins) in China has caused the flowering of numerous EV startups, most of which will not necessarily survive beyond 2020 according to…one of those start-ups.

NIO EP9

Nio chairman William Li stated that two, maybe three will be still around in five years from now, selling cars in a scale, required to stay in business.

“A car business is the world’s toughest business to start,” Chairman William Li said in Chinese on the sidelines of the Shanghai auto show.

“If you look in five years, there won’t be more than two or three companies reaching the minimum level of sales needed.”

Nio, besides its EP9 halo car, intends to begin production with the all-electric SUV ES8, which would seem to be a wise starting point considering the demands of the Chinese consumer these days.

The company is backed by nearly 40 investors (up from just 5 or 6 in the beginning).

“He said there is an opportunity for Nio to succeed by focusing only on electric cars and offering better service and digital functionality, areas where traditional car makers have difficulty.

“Traditional car companies aren’t seriously doing this,” Li said. “Their focus is still on hybrids and traditional cars.””

NIO ES8

source: Reuters

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4 responses to "Nio Exec Says China’s Dozens Of EV Startups Will Dwindle To 3 In 5 Years"

  1. Someone out there says:

    Yes, that is how it normally goes with any new technology.

    1. Pushmi-Pullyu says:

      This has more to do with how business and government works in China than it does to do with how new technology creates businesses.

      China has three levels of government: National, Prefecture, and local. The national government used to be Imperial China, but of course that was taken over by the Chinese Communist Party in the 1930s.

      But the Prefecture level governments have survived, and much of their traditional power, and the way they and local governments use protectionism and cronyism to protect regional and local businesses, keeping out business from other areas of China, continues to this day. In addition, many Prefectures subsidize their own industries, including their auto makers. The Chinese national government has been unable to do much to alter this basic power structure, or to drive out the corruption and petty tyranny so rampant at the Prefecture and local levels of Chinese government.

      In fact, the situation with far too many auto makers (and far too many subsidies) strangling the growth of any one of them caused the Chinese national government to move to shut down many of those companies, a few years ago. According to one article they planned to shut down 90% of the auto makers then in business, but I didn’t see any follow-up to that, so likely the Prefecture governments successfully resisted a lot of that.

      Anyway, Nio chairman William Li is almost certainly correct to say that only 2 or 3 of these new auto makers will still be around in five years. But what you may not realize, “Somewhere out there”, is that in five years there will almost certainly be another new batch of wannabe auto makers, and likely there will be about as many then as there are now.

      http://www.industryweek.com/global-economy/hard-times-ahead-chinas-auto-industry

  2. Bob Nan says:

    Not necessary, the declining battery costs give Electric vehicles a bigger advantage over the gas-mobiles. And this will give a market to all the EV makers. Currently the average price of battery is $230/KWh. And the bigger battery prices will suppress this soon to $100/KWh.

    Besides no one know what will the price of Oil be by 2020 when another 250 million vehicles are added to the World’s roads.

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