Beijing, pushing its electric vehicle market, is making it harder for start-ups to enter as it fights overcapacity
- Forecast number of vehicles produced by 2020 is 20 million, 10 times the government’s target
- Sales of new energy vehicles in China surged 61pc in 2018
Mainland China’s new-energy vehicle (NEV) start-ups are getting a rude reminder from Beijing: prospects and the government’s push of the booming segment is not enough to secure a manufacturing licence.
The National Development and Reform Commission (NDRC), the nation’s top economic planning agency, has promulgated new rules governing the production of electric vehicles, which are likely to cull a majority of small players to keep severe overcapacity in check.
“China’s tougher rulers on building new electric vehicle (EV) plants are likely to cool the EV investment boom and may temper long-term overcapacity risks,” rating agency Fitch said in a recent report. “EV start-ups will be the most affected, with many likely to be unable to enter the EV market in the near term.”
According to the new rules which became effective last Thursday, auto companies will not be allowed to build new battery-powered EV plants unless they have a minimum annual capacity of 100,000 units.
Start-ups and overseas firms are barred from setting up mainland-based factories unless they report global sales of 30,000 units or 3 billion yuan (US$443 million) in the previous two years.
Previously, there were no minimum requirements on capacity and sales.