In a recent video on the YouTube channel “The Electric Viking” by Sam Evans, alarming news about the Chinese electric vehicle market has emerged. The video shared that over the past four months, four different Chinese EV manufacturers and one major automotive group with hundreds of dealerships in China have declared bankruptcy, raising concerns about the overall stability of the EV market in China, which is currently home to a staggering 91 EV makers. Here’s the full story.
Extremely Dangerous Situation
Sam started by underlining the severity of the situation, describing it as “extremely dangerous” and saying that the EV market in China is sitting on a precarious edge. The collapse of Evergrande, the largest property company in the world and a significant player in the EV development sector, has added to the concerns. Evergrande, which had ambitious plans to compete with Tesla, declared bankruptcy with a staggering $130 billion debt, causing substantial losses for investors.
The video noted that the troubles in China’s EV market are not new, citing examples of Neutron and LeEco, which also declared bankruptcy in the recent past.
Many of Them Are Losing Money
He added, “Many of them or almost all of them are losing money. It’s only a matter of time before we see at least 20 more of them go bankrupt
Sam highlighted that the large number of EV manufacturers, nearly 90, in China has raised concerns, with the Chinese government expressing the belief that many of them shouldn’t exist.
A Crowded Market
Sam shared the risks associated with such a crowded market, with many companies struggling with market penetration and facing significant financial losses. He shared data from China Automotive Technology and Research Center which revealed that one-third of the 91 active EV manufacturers in China are registering sales of fewer than 500 vehicles per quarter.
Sam added that Evergrande NEV, which went bankrupt in October of the previous year, recorded losses equivalent to $17 million for every vehicle sold. Sam underscored that this highlights the massive problems faced by some of China’s EV makers, struggling with financial viability.
Dominant Players
Sam then pointed out that while some EV makers are stumbling, dominant players like Tesla and others are getting stronger. The top 10 EV makers are expected to account for around 80% of China’s EV sales in the current year. This leaves the remaining 81 companies with only 20% of the market share, indicating a significant concentration of sales among a few key players.
Sam also speculated on the potential outcomes for the struggling EV manufacturers, suggesting that at least 20 more of them may go bankrupt in the near future. Some may be acquired by other car companies, while others might quietly fade away. Sam predicts that this ongoing crisis in China’s EV market could have repercussions on the global automotive market.
China Needs to Continue to Export
Furthermore, Sam highlighted that legacy auto companies, such as Mitsubishi, have also faced bankruptcy in China. This contrasts with the success of Tesla, which has been thriving in the Chinese market and shipping tens of thousands of cars.
Sam concluded, “China needs to continue to export as many cars as it possibly can because it’s manufacturing too many cars for its Market. What does that mean? More bankruptcies to come, it’s almost certain.”
How Capitalism Is Supposed to Work
Several YouTube users shared their thoughts on the video where one user wrote, “That’s how capitalism is supposed to work. Make a product people want at a profit, no Bailouts.”
Another added, “Wasn’t this expected? No one would assume this many manufacturers would be sustainable. Most seem to exist just to see if they can get a piece of that govt. incentive.”
So what are your thoughts? How do you think this will impact the global electric vehicle industry, and what measures should be taken to address the challenges faced by EV manufacturers in China?
