China urges consolidation in new energy vehicle industry

Author: Fanny Zhang


SINGAPORE (ICIS)--China is calling for consolidation among new energy vehicle (NEV) producers in the country, to ensure healthy development of the industry currently being threatened by overcapacity.

NEV is a high technology-intensive industry and market players should maximize resource concentration and avoid unfocused development, China’s Ministry of Industry and Information Technology (MIIT) said.

The number of NEV producers in the country has surged to 479 to date, from 69 in 2020 and 48 in 2019, official data showed.

About 41.3% of the total are categorized as small producers with a registered capital of less than Chinese yuan (CNY) 40m ($6.2m), while large producers with a capital of above CNY400m account for only 14.6% of the total number.

On the sales front, the top eight makers’ combined sales of passenger cars exceeded 800,000, taking up more than two thirds of the total 1.2m units sold in 2020, according to data from the China Association of Automobile Manufacturers (CAAM).

Several producers with over 100,000 capacities posted zero sales in 2020.

In 2020, the total capacity of NEVs stood at 26.69m and sales was 1.37m, representing an overall operating rate of just 5.1% and idled capacity of 25m, according to MIIT’s research arm CCID.

What’s more, capacity expansions are still underway.

CCID predicts that total NEV capacity will rise to 36.61m by 2025, while operating rates are expected to stay at around 14.5%.

An operating load of above 60% is deemed normal territory for auto manufacturing.

The automotive industry is a major global consumer of petrochemical-based materials, which account for more than a third of the raw material costs of an average vehicle.

Focus article by Fanny Zhang

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