China Is Building Too Many Electric Cars

JAN 18 2019 BY BRADLEY BERMAN 128

China has 500 EV start-ups. The country can produce 20 million EVs a year.

The Chinese government is preventing new electric car companies from starting up. The news – reported this week in the South China Morning Post – reveals that China is facing a potential glut of EV production.

According to the Fitch rating agency, China’s established automakers and start-ups have the capacity to produce 20 million electric cars in 2020. That’s 10 times the government’s sales target of 2 million units this year.

The government’s restriction is aimed at new, smaller players – companies that are unable to produce at least 100,000 vehicles a year. These low-volume firms would be prevented from getting a manufacturing license.

The Motor-Lite is produced by BAIC, which can make 300,000 EVs a year. (Photo: Bradley Berman)

China is estimated to have about 500 EV start-ups. These companies are not the ones you’ve heard of – Byton, Nio or SF Motors – or the partnerships between major global car brands and large Chinese entities like BAIC, BYD, and Brilliant.

Last year, I visited the Beijing Motor Show where I encountered hundreds of obscure EV brands. I was able to drive about a dozen of these cars.

Zhidou, which makes the D2S, sold more than 72,000 EVs in 2017. (Photo: Bradley Berman)

The Denza 500, produced in partnership with Daimler, was a quite decent all-electric SUV. But most of them were like the Motor-Lite two-passenger car and the Zhidou D2S, the type of glorified golf carts that were sold in the US before 2010. The Zhidou D2S – like the Fiat 500e, but smaller – was equipped with its own onboard fire extinguisher.

I drove the Zhidou D2S. It came with a fire extinguisher. (Photo: Bradley Berman)

Leaving quality and capability (or the fear of imminent death) aside, it’s remarkable to consider the world’s largest car market as being oversupplied with electric cars. “The move to curb EV investment ticks all the right boxes as all signs are showing that the segment is getting overheated,” Qian Kang, a Zhejiang-based auto entrepreneur told the Morning Post.

The oversupply is occurring against the backdrop of Tesla breaking ground of its Shanghai plant this month. It’s expected to produce up to 500,000 cars per year eventually. In October 2018, Volkswagen began construction of its Shanghai plant that will produce up to 300,000 electric vehicles per year.

Overall retail car sales in China fell by 5.8 percent in 2018 to 22.3 million cars. That was the first annual drop since 1990. On the other hand, 1.26 million so-called new energy vehicles were sold in China last year, representing a 61.7 percent jump in sales. China’s shift from older polluting cars to new electric cars is expected to continue growing this year. However, Bloomberg forecast EV sales in China to reach 1.5 million units in 2019, a more modest rate of growth than previous years.

Categories: BYD, Byton, China, Lucid, NIO, Tesla, Volkswagen

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128 Comments on "China Is Building Too Many Electric Cars"

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Its great to hear you are considered low volume in a market unless your producing more than 100k BEVs per year.

Yep, according to metric practically everyone other than Tesla are low-volume EV producers (VW, Nissan, BMW…etc)

BMW sold 140-150k EVs worldwide in 2018. Nissan was on pace for 100k+.

BYD narrowly edged out Tesla, 247k to 245k, but Tesla was #1 in passenger cars because BYD sold 20k EV buses and “other” commercial vehicles. Tesla was #1 by far in BEVs.

Renault-Nissan-Mitsubishi are comfortably above 100k.

Not sure the alliance will last though, after the coup d’état at Nissan…

Plugin hybrids are not EV

Yet another attempt to redefine “EV” to mean only “BEV”.

The “EV” in “PHEV” means exactly the same as it does in “BEV”.

Or one could argue that “PHEV” is an attempt to redefine EV to mean “electric or partially electric”…

One could argue that “glory” means “a nice knock-down argument”, too. Humpty Dumpty did!

Wikipedia says:

“An electric vehicle, also called an EV, uses one or more electric motors or traction motors for propulsion.”

Nothing there says it cannot have other, additional means of propulsion. I find it strange that some EV purists argue as if adding a gas motor to an EV means that the EV powertrain magically disappears from the car!

But then it is not an EV anymore, its an EV with an internal combustion engine, so it’s a PHEV or a HEV. They are all totally different vehicles.

The terms have to tell you what the car is.

Looking like you are banging your head against an exceedingly stiff orthodoxy, endemic to some circles at insideevs 🙂

If they had more than 40 EPA miles of EV range, I’d consider them EVs. Sadly the vast majority of them do not.

They’re nice gas cars with a battery, but they’re in no way an EV and don’t have the EV luxury characteristics of smooth acceleration, with no gear shifts and no engine noise up to 140 mph.

Well, the good ones do, for the most part… There are just very, very few of them. (And one less, after the Volt is discontinued…)

No car can be an EV if it doesn’t have a top speed of at least 140 MPH?

No… I don’t think many people are gonna agree with your definition.

And someone who drives a Volt and uses only a single tank full of gas in a year, isn’t going to agree with your attempt to claim that a robust switch-hitter which performs as well as an EV as it performs as a gasmobile, isn’t an EV merely because it also has a gas motor.

Amazingly, in the real world, it’s possible for one thing to fit into two categories at once. Even motorcars.

I’m sorry but you are wrong. The terms describe the vehicle so you are driving a PHEV not an EV.

140 MPH? That’s ridiculous.

Exactly. I consider the Volt, for example, an EV. Also the i3 REx

You are joking with that BMW right? I own their “EV” BMW 330e PHEV. It’s so thirsty in winter that it can’t go more than 7 miles.

No, you are adding hybrids to those counts.
These are EVs, not EVs and hybrids.

Don’t bother counting vehicles that have an internal combustion engine because big auto use that to pretend they are doing more to clean up emissions than they actually.

For the moment.
Hopefully, others will join in on that.

Tesla produces zero ev in China.

Or a market of Billion people

The % of eligible car buyers is smaller, such that the # of eligible car buyers is similar to the US. An unignorable economic powerhouse in any case.

And that’s with 1/8th per capita GDP of US. Imagine when they’re 1/4 or even 1/2 PC GDP of US.

There is no way that the 20,000,000 number is correct with 1.26 million sales in 2018. It’s a preposterous number.

Not necessarily. In a growth market, companies tend to outdo each other in building massive over-capacities, hoping to grab the biggest future market share.

Of course that doesn’t mean they could actually build anything close to these 20,000,000 EVs in a year: despite huge ongoing growth, production of batteries (and probably other components) is still nowhere near large enough to supply all these factories at full capacity at the same time…

Certainly there isn’t sufficient global battery supply to build 20 million EV passenger cars a year in the coming year, and almost certainly not for the next 2-3 years. But I won’t try to predict how fast the battery cell supply is going to ramp up. At some point it should start following the rapidly accelerating demand for EVs, with supply ramping up very swiftly indeed.

China has a population five times larger than the USA but new car sales are only marginally higher. Most people in China don’t have any of motorized transportation except for public transportation. Small, low cost EVs might be a way for a lot more people in China to achieve greater personal mobility and thier efforts may teach the rest of the world a thing or two about personal mobility.

China has a public transit system that is more than 3 times what Europe’s and the US have put together. Cars are a naturally lower priority in a country where clean, fast, efficient metros and high speed rail are the backbone of the transportation system.

Yeah high speed rail takes a New York to Chicago trip of 24-28 hours and make it in 6 hours in rail

Plane would be, what, 1 hour? Before you say airport security BS, high speed rail will also require them after one gets blown up by nutjobs.

1 hour won’t even get you through TSA screening trying to fly somewhere.

I have never waited more than 30 minutes to get through since 2003.
Where are you flying in/out of?

BoltEV,
High speed trains are not so good targets for blowing up as concentration of people inside is lower than in commuter trains. They are targets for derailing.

And of course attacks did happened many times before, yet we don’t have anything similar to TSA for trains. They are on the ground after all, not in the air.

Yes. TSA == Word Trace Center towers.
Trains can’t travel that far outside of tracks so mandating minimum distance from object of importance is easy.

Have you traveled by train in China recently ? Security in the stations is similar as in airports, but the layouts of the new stations (hundreds built in the last 10 years) are so optimized the process is much quicker than in the antiquated and overflowing US airports. And the trains go 200 mph. I wish we had those on the coasts and other dense areas in the US

Nope.
First off, many of our older airports are way over capacity. The problem is, that CONgress are gutless and continue to steal from the aviation fund and pour into their own pet projects.

Secondly, Chinese security are armed guards all over the place. Want that in US Airports? Other than TSA acting like Chinese security, we really are pretty light.

And the last thing that you want is CHinese trains. Instead, we need hyperloop and soon.

Trains can’t be turned into guided missiles attacking extremely high-value targets. Blowing up a train isn’t going to cause such levels of panic that we will have airport-type security, any more than blowing up some buses has forced cities to introduce that level of security on buses.

Yeah, it is not like passenger trains ever go to where ppl are.

Can you say “Lilium Electric Vtol Jet”?

US 17.5 million light vehicles China 26 million light vehicles.
Roads are already so congested in the cities in China it’s more like a parking lot. China limits amount of licenses issued and days you can drive. China is working on reducing the pollution from all the ICE.

They still sell ICE cars. China policy if focused on making sure that if any cars are sold those are zero emission ones.
(Aka avoiding revolution caused by smog)

So, this policy is INSANE.
I’d think Chinese leaders were smarter than this.

Not only does China continue to sell ICE and Hybrids, but these are NOT replacing old ICE vehicles. They are adding to the fleet, the same way that EV are.

And if China really cared about smog, they would stop adding 250+GW of new coal plants. Even at their best, these are horribly polluting. China is not spending the money to push AE.

Don’t forget nowadays in the US pretty much every adult gets their own car (at least in California).

Here in the Midwest as well

Yeah. Even those parents struggling to get by still give their teens their own cars these days, in the U.S. It was a lot different when I was in high school, when the only students with their own cars were the ones who got summer jobs to earn one!

Unless things have changed over the last 20 years or so, the midwest is still spread out with massive suburbs and most businesses in the cities. As such, if you live in the burbs, you need a vehicle. If you live downtown, not a problem.

Nobody walks in LA. Those were the days…

https://www.youtube.com/watch?v=R_UpLtGEWoY

I was explaining the need to go to the DMV to get an ID card to my Colombian wife, and she started to laugh. I asked why. She said “you are telling me everyone drives here”. Funny but true.

Actually no, in most cities.
In Philadelphia, if you need a car, then you need to find street parking, with tourists competition, or get a rental parking space.
Or, get a job in the city, and walk to work, walk to the Museums, walk to dinner, and if it gets a little chilly take a Taxi or a Lyft, or the subway to get out of the wind, rain and snow.

Uber sucks for employees.

Technically, she could get a simple ID card. Of course, those are the minority of issued cards.

Per capita, China is lower in terms of their sales of EVs.
BUT, there are still to many chinese companies making junk.

Not sure that restricting companies making fewer than 100k BEVs per year makes sense. If oversupply is an issue, I’d say the solution is to mandate quality levels. Require a certain Wh/mile, impose safety standards, etc…

And for all of that, only require it for government funding. Leave the free market to make low quality EVs… if that’s what the people want, then it’s not oversupply, is it? (I know… I’m talking about free market in China…)

Or just export the extra supply to the neighboring populous countrues such as India (1.3b), indonesia ( 265 m), Pakistan (220m), philapines (107m) and Bangladesh (166). Last time I checked these were some of the fastest passnger car makets in the world esp Pakistan and Philapines have double digit growth rate.
I am sure there is a huge market for low cost EVs beyond the Chinese border.

Genius. Exports. China.

That doesn’t mean most people in these markets can afford EVs, without the generous subsidies granted in China…

Indians sure as heck do not want CHinese products. Problem is, that CHina forced themselves on India and I suspect that trying to dump Cars on them, will not end well.

I agree with your first paragraph, not the second. Many if not most of these new small start-up produce low quality unsafe cars. Do not leave free market to limit population by auto deaths. If the government would raise safety standards and enforce them, this problem of 500 new EV start ups would go away.

If the Chinese government implemented US or Europe safety standards, the number of startups making EV’s would drop from 500 to zero. The number of cars sold in China every year would drop from 26,000,000 to zero….

Given that European and Japanese cars are also license-built in China, it is illogical to say that no Chinese car could ever meet their safety standards.

I have no doubt that someday, Chinese auto makers will be selling EVs in the EU and in the USA. That may happen within the next few years. But they’re going to have to improve their quality quite a bit, first.

There are Chinese brands in Australia.

Look up “great wall” motors. I have no personal experience, and Australia is closer to USA than EU, but we ain’t no third world road network that’s for damn sure.

And yet, if you are importing Great Wall, you are kidding yourself.

Yes, I know a tradie who bought one when they were marketing heavily a few years back. It was packed with features at the price and he loved it for about a year and then things started going wrong big time. Turned out to be a heap of junk.

You don’t see many of them about anymore and they stopped advertising.

BYD buses and taxis are in several EU countries.

BYD buses are in America and are being found to have major QA issues with designs and batteries.

Yeah, BYD buses are not exactly a poster child for the high quality of Chinese manufacturing.

And yet, they are better than most of China.

BYD buses sold in the US are all produced at Lancaster, USA, by American workers.

BD buses sold in Europe and China are made in Shenzhen China.

Not a posterchild for setting up plants in the US

So are some GM and Buick cars. Of course, they do not sell well here, nor have they done a great job on safety or QA.

Yes, at this point, only the ones with legacy car makers are considered safe.
BUT, of those 500, I suspect that at least a couple are not total garbage.

there should be no mandates. The markets will sort it all out automagically.

Exactly, it’s insane policy for a country so polluted.

Limit should be 100.

My hope Is that we can start calling EVs New Energy Vehicles in the west because consumers still get confused over what an EV is, as strange that sounds after all these years. We all know that sales of trucks with passenger compartments welded onto the back or tall station wagons with all-wheel drive went through the roof when marketers labeled them as Sport Utility Vehicles.

Yeah, because a new term will help solve that? You can’t fight language, you can only hate it.

I don’t think adding yet another term to the already rapidly growing lexicon of EV industry terms is going to solve the confusion created by EV “purists” trying to redefine “EV” to mean only “BEV”.

BTW — The acronym NEV is already in use on EV forums. Outside China, it means “Neighborhood Electric Vehicle”. Only in articles related to the Chinese EV market does the term “NEV” mean “New Energy Vehicle”.

For a lot of people EV means Expensive Vehicle.

“For a lot of people EV means Expensive Vehicle.”

Since used EVs are so much more expensive than used ICE vehicles? Ah, no. Fully competitive EVs did become price competitive at the very top of the market first and have been moving down the price scale ever since, but there are plenty of price competitive EV choices and most people buy used vehicles anyhow. New cars are bought by the wealthier slice of the population. This is just a stale talking point.

Good, helpful comment.

Regardless, that’ll be history in the blink of an eye. Even now, “poor people” could afford to lease certain EVs, in some states.

Sure. They say that. But it is not true for some.

Volkswagen will build a fine product that stands above many of the Chinese brands, the cream will rise to the top as usually does in a free market situation and only the best consumer electric vehicles will remain after a generation.

Tesla will succeed in China just has it has in North America because they carve out a unique place in the market. Tesla is considered a luxury premium brand even though their goal in existence was to provide affordable electric cars to the masses.

$35k is not affordable to the majority of the people. It is still a higher end vehicle no matter how you look at it.

“$35k is not affordable to the majority of the people. It is still a higher end vehicle no matter how you look at it.”

Yes, $35k is the market median so it is on the high end for new cars. New cars, however, as a rule are not affordable to the majority of people. Most of the population buys used cars.

“…the cream will rise to the top as usually does in a free market …” No, often cheap wins. I would not describe cheap unsafe cars as cream.

Reportedly many of these small startups are bolstered by local protectionist regimes — meaning market forces alone can *not* solve this problem.

The need more ev production to replace all the ice current production.

I find this an odd approach. Rather than curtailing the businesses, why not put restrictions on what kind of EVs can be produced? E.g.: must meet crash test regulations, must be able to go X km/h, must have a range of at least Y, etc.

While I agree about safety requirements, performance requirements seem rather arbitrary. IMHO they actually have too much of that already…

Well I certainly hope Tesla works on recycling batteries and has the capability at each factory they build. Recycling batteries cheaply has to be part of the strategy. In a few years there’s going to be a tons of batteries.

There are already kilotons of EV batteries, if not gigatons, made every year. Two Model S’s probably contain a ton or more of batteries.

Well, that’s what Tesla is promising… And Chinese makers reportedly are on it, too.

Just start to export EVs.

I’m sure if they could they would. India has a 60% tariff not sure about the other countries but I wouldn’t be surprised if they were high as well.
India and these other countries want foreign companies to build in there country so they have a labor force that can afford to buy the vehicle.

How many of China’s EVs comply with the regulations elsewhere?

Article headline: “China Is Building Too Many Electric Cars”
——————-

Perhaps more accurately….

Chinese government invested in too many EV upstarts.

It’s a chronic problem in China. Local protectionism at the Prefecture and municipal levels of government favors local industries. This makes it hard for any Chinese auto maker to sell in all parts of China. And unfortunately, it encourages a lot of “pop-up” auto makers which spring up like mushrooms, sell cheap, poorly made cars for a year or two in their local region, then disappear before they start having to deal with a lot of warranty repairs.

The Chinese central government would like to put a stop to this, but the system of semi-independent Prefecture governments, with their local protectionist laws and/or regulations, has existed since the days of Imperial China, and has proven very resistant to change.

Every year or two, we see reports that the Chinese central government is trying to suppress these tiny pop-up auto makers, but the same problem keeps reoccurring.

Funny – I don’t recall any EV commentators ever stating – let alone headlining – that major carmakers everywhere are producing and selling far too many >gasoline< vehicles – especially SUVs and pick-ups. Far far too many – given not least the total environmental meltdown that 97% of climate scientists assure us is now almost inevitable unless carmakers, consumers, politicians rapidly wrench their dont-wanna-know, egocentric heads outta the freakin sand.
Paul G

Far too many small fly-by-night auto makers popping up and flooding local/ regional markets with cheap, poorly made cars (not just EVs) is a problem unique to China. See my longer comment above.

I’m pretty sure GM just closed a bunch of gas powered car plants.

The more the better

But Bloomberg is stupid and corrupt (sponsored.) What is remarkable is China could apparently replace 90% of its ICE market this year.

A lot of these tiny local automakers may be claiming capacity they don’t really have. They’re likely chronically undercapitalized.
But most important, Beijing has a larger agenda, and that requires big companies with big R&D budgets. That agenda is global exports. Japan’s government once imposed export agendas on its automakers; quality requirements on exports (which succeeded), and arranged mergers (most of which didn’t happen).
America had hundreds of automakers in the 1920s; dozens in the 1930s; a dozen in the 1940s; and 5 by the end of the 1950s.

That Motor-Lite concept looks like a cross between a Smart car and a second generation Land Rover Discovery… which actually kinda works. Its maker BAIC seems quite committed to autonomous driving by partnering with a Silicon Valley company to develop state-of-the-art LiDAR technology. The practical application of this technology is probably further off, but if China expects a boom in affordable EVs, autonomous driving would certainly help with traffic congestion issues.

Autonomous driving doesn’t reduce congestion.

And there is a growing number of voices saying that LIDAR is a dead end.

Fire extinguishers are compulsory in all cars in Europe and come fitted as standard. Bit surprised the author doesn’t know this and thinks it’s odd to have one

As are yellow jackets…

And accident warning triangle is also compulsory.

Pendant here, shouldn’t that read China has too much EV production capacity, I doubt they build 20 million when demand is only 2. And if the 20 million number is anywhere near accurate it may mean the winners of this initial round can ramp more easily by taking over the production equipment of the losers. Now some of this equipment won’t be transferable since not all of vehicles are of equal performance, but I really dislike the headline it’s misleading.

I love when I don’t notice the auto-corrects, Pedant not Pendant. ah that makes me laugh.

fea. Airplanes are pretty standard equipped with a fire extinguisher, but I suppose that is considered a bad sign on a car.

What is “it comes with a fire extinguisher” supposed to suggest. A Mercedes also comes with a fire extinguisher.

All cars should be electric. Its a definitive statement.

It,s very good for all the Wolrd, I think

Actually fire distinguisher is required in every car by law in China.

Tesla has proven being an overall trusted quality ev production company based on the amount of satisfied customers .. that’s I’ll ive got to say . Good day 🙂

Has this assassin’s headline been suggested by Exxon Mobile?

Ship them to the U.S. and flood the market with EVs before GM, Ford and Chrysler get off the launching pad. Will serve them right.

Tariffs, baby. They put them on Chinese e-bikes, they’ll put them on Chinese e-cars.

China can require buyers to purchase the EV which makes it a bit unique market.

Misleading title. China is not building too many cars, they have too many EV car companies. Only few of them will be viable and many customers will be left stranded if the small companies go belly up.

Yeah, it looks like another headline written to be provocative rather than accurate.

if they are building too many, are they making too many of the good EV’s that get over 200 miles and cost below $40K?
export them to Eu or USA.
problem solved.

This happens in China all of the time in just about every industry. So wasteful…..