Does China Have Too Many Electric Vehicle Companies?

The uptake of electric or hybrid vehicles among consumers is increasing, thanks to the different regulatory measures and restrictions imposed by different governments - following the well-known Agenda 2030. 

Trading News 16 September

Recently, the Spanish capital has approved new mobility restrictions for polluting vehicles that will come into force in the coming months. This plan will establish different zones in Madrid in which only vehicles with the corresponding energy and emissions certifications will be allowed to circulate freely, thus joining other major European capitals and cities which have already imposed similar measures.  

All of this leads us to believe that the development of these types of vehicles is only going to grow in the coming years. This realisation has led large vehicle manufacturing companies to increasingly offer this type of car to their consumers and companies - as we saw after the agreement reached by Kia Motors and Uber in June.  

Undoubtedly, the current king of this niche market is Tesla, despite the fact that Elon Musk's company has to compete with giants and premium brands such as Mercedes, BMW and Audi, which have all been in the automotive sector for much longer. However, the reality is that in the race to take over the electric car market, for the moment, it seems that China is Tesla's main competitor.  

In recent years, China has seen the emergence of a number of electric vehicle companies, including NIO, Xpeng and BYD. But could this be a problem?  

Although it is beneficial for there to be competition in the sector, as this favours innovation and prices, it seems that, as far as the Chinese Minister of Industry and Information Technology is concerned, it is a problem. He considers that there are too many companies of this type, so it seems that the government will try to encourage their consolidation. Therefore, we may see the beginning of possible merger movements in the coming months by the Chinese government - which generates uncertainty in this sector.  

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