Activity in China’s auto industry has exploded over the last few years and the country recently overtook Japan as the world’s biggest exporter of cars, a position it is sure to hold as it is only just starting to roll out availability of new models in Europe.
But back in Beijing officials are threatening to reign in and curb the expansion of the nation’s electric vehicle (EV) manufacturers, according to a report by the Financial Times.
More: China Overtakes Japan As World’s Largest Car Exporter
Xin Guobin, vice-minister of industry and information technology, whose MIIT department is the one that routinely gives us a sneak peek at upcoming models before the official launch, was quoted by the Financial Times as saying there was “insufficient” demand for additional new products and pledged to take “forceful measures” to deal with “blind” programs to start new EV projects by both local authorities and businesses.
He added that he is aware of “some disorderly competition behaviors,” which suggests he believes domestic automakers are doing everything they can to stomp on their rivals and reach the top of the heap.
Guobin isn’t the only one raising concerns about the EV market and China’s role in it. “The biggest concern is that the market for EVs has quickly become supersaturated and that a vicious price war is just around the corner,” Louis Gave of Gavekal Research wrote this week, as reported by the FT.
“Now that automakers have ready access to generous bank credit, the path of least resistance is to try and gain market share and kill off the competition by slashing prices and margins,” Gavekal noted.
Chinese automakers sent around 5 million vehicles beyond the country’s borders last year, fueled in large part by a booming import market in Russia. Europe is only just starting to get the first trickle of Chinese imports, but that trickle is about to turn into a torrent and it has both Western carmakers and the governments of car-making nations terrified. The European Commission recently opened a study into whether Chinese automakers gained state subsidies that gave them an unfair advantage versus European brands.
