A mysterious future for electric car makers in China

In Shenzhen, in southern China, the city that has become the capital of the electric dream, if you want to buy a fuel-powered car you must win a lottery ticket or enter an auction, as this city became, in 2017, the first city in the world to offer a fleet of electric buses.

A year later, the government devised a plan to replace taxis with electric cars.

Han Zhou, 29, wants to head toward environmentally friendly options, so she chooses her next car to be electric. But part of the option to buy a car that runs on electricity is also practical.

With the license granted to buy the electric car, you don't have to wait in line, says Han.

In Shenzhen, there are two freight units in almost every apartment building. One out of 10 cars on the street is a Tesla type, says the data-analysis young woman.

Han Zhou believes that technology and money go in the same direction as politics in China.

In less than ten years, the new electric car market in China has become the largest in the world. In 2018, over a million electric cars were sold in China in 2018, three times the number of sales in the United States.

Beijing has invested nearly $ 50 billion in industry, hoping to dominate the electric car market and globally outperform the car market in the future.

This policy has been successful until now.

Over the past three years, the number of Chinese electric car manufacturers has tripled, including more than 400 locally registered companies.

But this rapid expansion warned the government, and last year decided to withdraw about half of the financial incentives it provided to buyers.

This was followed by a rapid decline in the sale of electric cars in the fourth quarter of 2019.

Today, this market took a second blow due to the Coronavirus crisis, and manufacturers were forced to suspend production lines and close agent offices in attempts to stem the spread of the virus.

Total car sales fell 79 percent in February, compared to the same month in 2019, according to figures from the China Automobile Manufacturers Association.

Sales of new energy vehicles (NEVs) declined for the eighth consecutive month.

The auto market in China was already suffering from a significant drop in demand in 2019, and this year, not a single automaker has been immune from the effects of the Coronavirus, said Scott Kennedy of the Center for Strategic and International Studies. Innovative electric cars' manufacturer.

The vast majority of (electric car makers) will not survive, according to Kennedy. But he adds that how long they stay or go bankrupt will happen, dependent on the government.

New may be the most prominent Chinese companies in the electric car industry, after listing on the New York Stock Exchange in 2018 and raising billions of dollars.

But in the five years after its founding, it suffered from problems and lost hundreds of millions of dollars. The company cuts 2,000 jobs in 2019 due to lower revenues. In February, it announced the signing of a preliminary agreement with a local government, which it pledged to finance.

A spokesman for New said that the Chinese market is huge and growing at a rapid pace. And We will adapt to market conditions.

It is not just about car manufacturers. It also applies to major car component manufacturers such as batteries.

In 2018, Cattel, a Chinese electric battery maker, became the official supplier of BMW electric cars.

Tesla announced last month that it would enter into an agreement with the company to supply batteries for its newly built huge plant in Shanghai, which is capable of producing 500,000 vehicles annually.

However, some experts express their doubts despite this apparent success.

Chinese auto and battery technology are still out of world-class. The Cattell and BYD battery makers are strong, but they're still somewhat rudimentary on the technology side compared to their counterparts in South Korea and Japan, says Scott Kennedy. The Chinese are second-rate producers even in their own country and hardly have sales outside of China.

For auto buyers, the issue of quality lies with the manufacturers of electric cars in China.

Yi Zhiyong, a middle-aged businessman, drives a hybrid car made by the Chinese company BYD. He did not buy an electric car because he was not sure about the quality. The quality of domestic pure electric cars is not good right now, he says. There is no local electric car worth buying yet.

But he is proud of the progress China has made: In the 1990s, we could not have imagined that China could build cars that would compete with the Japanese.

Returning to Shenzhen, Han Zhou says that declining government support will not prevent her from buying an electric car. But instead of buying a Chinese brand, it looks to buy a Tesla.

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