Dreaming of the birth of the “Chinese version of Tesla,” the Chinese government has invested billions of dollars in the electric car industry over a decade, but the subsidies have been misappropriated and the industry is experiencing a cold wind at a time when subsidies are being abolished.
According to CNBC, the Chinese government has been aspiring to develop new energy vehicles since the return of a German Audi engineer about 10 years ago. He persuaded the Chinese government to implement a national strategy to invest billions of dollars in developing new energy vehicles.
As a result, venture capitals have poured billions of dollars into the emerging electric car industry. Along with the support of the Chinese government over the years. Thanks to this, about 500 Chinese electric vehicle manufacturers have been established. And China has become a leader in battery technology.
However, some automakers are going bankrupt one after another due to sluggish sales at present. Sales are expected to further decline as consumer subsidies for new energy vehicles will be phased out next year.
How the dream of Chinese Tesla started to fall apart
Shares of electric vehicle Nio fell more than 50 percent this year on the U.S. stock market. In November, Alibaba-backed Xiaopeng went out to attract $400 million worth of investment. While BYD reported a 130 percent on-year drop in its net profit in the third quarter. Some even say that the fever in the field was not a bubble. When the companies that survived after 10 years of investment issued such poor grades.
Earlier, some companies turned out to have misappropriated the aid on a large scale. Which was also the reason behind the slowing growth in sales of new cars due to consumers’ antipathy.
According to the Chinese finance ministry, the central government spent at least 33.4 billion yuan in aid between 2009 and 2015. While Chinese auto industry said the number of new energy vehicles sold more than four times in 2014. From the previous year in the wake of the electric car boom, and more than quadrupled to 330,000 units in 2015.
In 2016, however, the Treasury Department found that at least five companies received more than 1 billion yuan in aid unfairly. Sales of new energy vehicles rose only 53 percent that year, dampening gains.
Currently, China’s CATL is the top manufacturer of global electric vehicle batteries. In the case of electric cars sold in China, it is due to the policy of limiting subsidies if they are not a local battery company. China is the world’s best-selling market for electric cars.
However, some predict that this trend will slow down within a few years if government reduce subsidies for electric vehicles. The Chinese government’s support policy is scheduled to end in 2021.