Chinese EV Startups Jeopardized By EV Friendly Government? Only 10 To Be Permitted?

SEP 24 2016 BY MARK KANE 19

These are uncertain times for electric car startup companies in China, despite the fact that the NEV (New Energy Vehicle – plug-in vehicle) market is booming.

LeEco LeSEE

LeEco LeSEE

As it turns out, the Chinese government is apparently considering tighten its support under the country’s strategic policy, limiting the number of new licences for EV startups to maybe just 10.

A cap of “10” would effective wipeout most of the over 200 companies dreaming about being the next major EV carmaker.

“New regulations are expected to pull the plug on many of the 200 plus companies that make up China’s electric car industry. The government is imposing strict standards on technology and could cap the number of manufacturers. Bloomberg’s Kongho Chua reports on “Daybreak Asia.””

Other recent news that fits the climate of this story is the recently discovered lack of approval to sell electric cars in China for LeEco. It’s not necessarily directly related to this upcoming change of policy, but well…the lack of special permissions/allowences in China could certainly hurt when you invest millions or billions.

Stepping back, one has to ask, why would China intend to limit the number of EV companies, instead of just let them fail or consolidate over time?

Some believe there is a growing EV-bubble in China, because very high incentives, and this move could be an effort to try and defuse that bomb, or it could just be the old fashion”favortism” thing rearing its head.

source: Bloomberg

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19 Comments on "Chinese EV Startups Jeopardized By EV Friendly Government? Only 10 To Be Permitted?"

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First they start the fire and then, oh no it’s too big, and they try to bank it. Recent history is littered with failed attempts of the Chinese government to control the dragon they are trying to ride, as they alternately feed or starve it, depending on their whim.

They are just not nearly as smart as they think they are. The so called Chinese miracle is really turning into quite a nightmare, partly due to the incompetence and corruption endemic within the Chinese system.
They are like a drunken captain lurching his river excursion boat, now to port and now to starboard down the flooded Yangtze, while the crew tell the startled passengers that there is nothing to worry about.

I would not knock Chinas managed economy since their middle class is exploding while Americas middle class is imploding… Chinas failures managing their exonomy are in the distant past… It is also not like the US, Japan and other countries havent dolled out billions to big auto for green transportation while saving some of them from bankruptcy and managed the process that govern the handouts… Meanwhile America pratices socialism giving handouts to lots of imagrants who can run fast or hold an AK and neither of them will ever comtribute anything truly worthwile… So do all we have a managed economy?? Limiting the permits to 10 EV start ups is good and I am not so sure that is not too many… When they limit the start up numbers they also limiting the companies they are handing out subsudies too for green transportation… Thise subsudies are a large reason 200 companies wanted to make EVs… It is only reasonable that you make sure a company has a sound business plan and financing along with talent before you hand out millions to them… China already has 12 auto companies making 500k plus vehicles a year and they are potentialy adding 10… Read more »

Well, that was quite a collection of ignorance and anti-immigrant xenophobia and bigotry.

The USA is a nation of immigrants. We are a stronger, richer, more creative and more imaginative nation because we have embraced immigrants from all corners of the globe.

The last thing this country — or any other country — needs, is the same kind of anti-immigrant propaganda and hate-mongering that propelled Adolf Hitler to power. But it looks exactly like that’s what has been happening over the past few years.

+1 which could be our downfall and maybe that is why our enemies are happily fueling it in posts like his.

You want to label me in some overly siplistic way… fine… but I only have problems with imagrants from 1.5 parts of the world and the rest are prety awsome…

The real truth is all cultures are not created equal and imagrants bring there culture and way of life with them to make America something more or something less…

Comparing anti imagration to Hitler is silly…

Hitlers rise to power was not about imagration it was mainly because Germany was forced to pay for the entire cost of WW1 and the people got pissed because they were poor so they hitched the first ride out which just happened to be with a psycopath…

Hitler scapegoated Jews as though they were recent immigrants, implying that they were as unassimilated into Western norms as Polish and Russian Jews – which was completely untrue – and throwing his talents into ongoing conspiracy theories blaming Jews for Germany’s sudden surrender in 1918. He implied that all Jews were to blame for Communism, just as some Americans blame all Moslems for jihadism or all Blacks for crime.

And his final solution began with the same seed that anti-immigrant radicals cultivate: that the alien contagion can be surgically removed by ethnic cleansing.

So if we revise “First they came for the Communists and I did nothing” by substituting the word “Moslem”, we get at the heart of the issue: that the strategy of eliminating entire cultures of people by removing the people will stop at just the currently most-reviled people. Why will it stop once you’ve gotten away with it? Maybe we will take out our anger at being eclipsed by China by punishing Asian-Americans next, despite their presumably meeting your own standards of usefulness.

That is how socialist planned economies work, or rather don’t work. They fail to take into account people’s ability to skirt around the stiff rules. Whenever regulations are introduced they cause unintended side effects and then these need regulation too.

Stop china bashing, lets look at our land, most of states either rolled back or frozen incentives. They have done better than we did here in US period.

+1 I am impressed by China’s recent ability to see and act on the climate change where the US has just looked like fools for a long time.

The U.S. “Clean Air Act” dates to 1963. The “Clean Water Act” dates to 1972. The former actually has been properly enforced, in both GOP and Democratic administrations. The latter perhaps less so, but certainly things are much better on average than they were when the Cuyahoga River in Cleveland infamously caught fire in 1969.

It’s not that the U.S. hasn’t been fighting pollution as fiercely as China currently is; it’s that the U.S. never let things get the air and water quality get nearly as bad as it is in China, where the air is so bad in many major cities that parents don’t let children play outside, and a significant number of commuters wear breathing masks when traveling to and from work.

They had no good options. Before becoming vice-president (virtual dictator) of the US, Dick Cheney created the Project for a New American Century to prepare the way for Bush’s oil-based imperialism. The position papers put out by PNAC members (many of whom gained high positions in the Bush Administration) called not only for the US to exert control over oil supplies to extort obedience from the rest of the world, but it called for hostile action against any country that dared to challenge US supremacy – regardless of whether that challenge was based on peaceful trade. Thus Chinese leaders could fairly expect any further expansion of their economy to head off social unrest would be punished by sanctions or military blockades using one excuse or another. I believe this is why when Cheney trapped US forces in Iraq, China went into economic overdrive. It had a limited amount of time to increase its economic power so greatly that the US could no longer dare to do to it the things it has done to Iran and other countries. By 2006 the US was forced to engage in extraordinary borrowing to continue the neocon vision of war without sacrifice, and Chinese… Read more »

Big Oil influence? As in Norway?

Agree, Big Oil and Ice Car Manufactures have got to the Chinese Government.

The Chinese government has figured out that excesses lead to boom/bust results which turn out to be no good for anyone.

Good only for cartel, Occidental style. We just love paying 10 times the price for crappy goods.

The article asks: “…one has to ask, why would China intend to limit the number of EV companies, instead of just let them fail or consolidate over time?” My opinion: For the same reason that the central Chinese government instituted policies back in 2010 to encourage or force consolidation of too many small auto makers into a smaller number of larger ones. I certainly don’t claim to understand all of what’s going on since I’ve never visited China, let alone lived there. But based on what I’ve read, the problem is that there are a lot of local businesses which pop up, including auto maker startups, many of which are given local or regional protectionism by the Provincial or Prefecture governments in China. For example, in some cities or Prefectures (and some large cities are their own Prefecture), it may be difficult or impossible to license any car except those made at a local factory. (Or at least that was the case; perhaps the situation has improved over the past few years.) So this tends to create a situation where it’s difficult or impossible for any auto makers to grow to an appreciable size. 100 small auto makers are not… Read more »

Sad story, have they forgotten the smog.

There could be a consolidation and merging of the smaller companies with world wide partners.

So many people criticizing this particular policy change with no clue about the reality on the ground. 200 plus companies developing around 4000 new energy vehicles… does that sound right to you? Please drop your bias against China for a second and think about it objectively.