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China fearful of EV over-capacity

As world increases electric production, China doubts sustainability

Published: December 26, 2016, 3:00 AM
Updated: February 14, 2020, 9:04 PM

car2go charging - (Credit: Wikimedia Commons/Avda/avda-foto.de)

China, the world’s leading producer of electric vehicle technologies, is showing signs that all is not rosy in the EV future.

Electric vehicles are being touted the world over as the wave of future transportation and a lot of money is currently going into, and more is planned to go into, research and production of an ever-increasing number of EVs, but now China is starting to crunch the numbers and worry about EV over-capacity.

The website ChinaDaily.com has raised the alert of severe over-capacity in a report about the number of start-up and traditional carmakers falling over themselves to produce the environmentally-friendly modes of personal transportation in what it calls “the largest gold mine in the automotive industry.”

The story broke shortly after the latest company (the sixth Chinese company this year), the Wanxiang Group, got the go-ahead to build a plant in Zhejiang province that would push another 50,000 EVs per year off the assembly line. That’s over 1 million units combined by the end of this decade.

Add in the combined capacities of 15 other companies building electric vehicles in China, and the output of EVs in the country would be about 7 million vehicles (that’s electric vehicles only!) annually in 2020, more than three times the country’s stated EV-sales goals of 2 million new vehicles annually.

Governments in the country are offering large incentives (a combined 33.4 billion yuan, or about $6.5 billion Canadian) to buyers of both personal and commercial electric vehicles, but the government has announced a plan to do away with subsidies over the next four years.

“It is easy to churn out cars but difficult to produce good ones,” Cui Dongshu, secretary-general of the China Passenger Car Association, told ChinaDaily.com. “And a number of factors, including declining subsidies, will make it difficult for the market to see explosive growth.”

The website estimates that plants with combined capacity of 5 million vehicles would sit idle even if the country meets the ambitious 2-million target, while statistics from China Association of Automobile Manufacturers shows the industry is on pace to grow “green” vehicle sales (EVs, plug-ins and fuel cells, but not hybrids) by 60% this year to about a half million, which is actually quite impressive in light of the overall market growth of just 13%.