Car Industry

Quantity over quality: China's booming EV industry might be ready to bust

New regulations and looming government decisions could whittle some 200 electric automakers down to just 10.

The BYD E6, a domestic-market Chinese EV, is actually available in the US, as well, but only for fleet purchases.

BYD

If you want to see what rampant growth in the electric-vehicle industry looks like, gander no further than China. The Middle Kingdom has about 200 automakers all involved in manufacturing the next generation of electric vehicles, which might be a bit unsustainable. In fact, it might come collapsing down in the very near future.

The Chinese government may seek to limit the number of EV manufacturers to as few as 10 by adding stricter standards on new companies, Bloomberg reports. The standards have already been bumped up, but there's no limit on the number of companies right now.

Thus far, only two companies have received the new approval to build EVs, and three others say they plan to apply. This doesn't include traditional full-line automakers like BYD, only new companies seeking to build nothing but alternative-energy vehicles.

Officials are concerned that this glut of companies hoping to solve China's persistent pollution problem is creating a problem of its own -- pushing for quantity over quality. China wants its electric cars to compete on the world stage, alongside Tesla and others, and it thinks that the billions of dollars poured into this industry would be better off with a bit of focus.

It's not like there aren't buyers to meet this demand, though. According to government data, China 331,092 domestic alternative energy vehicles, which includes EVs, plug-ins and fuel cell vehicles. China actually outpaces the US in terms of market demand for these cars. The government wants those figures to expand tenfold by 2025, and it's subsidizing the vehicles to try and foster that sort of growth.

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