COVID-19 Slams China's Oversaturated EV Market
The coronavirus is putting the hurt on a ton of businesses, but none more acute than the auto industry. No one’s driving, so no one’s buying cars, and with a market that’s already massively oversaturated (in the presumed birthplace of COVID-19), you’ve got all the ingredients in place for a major recession.
In China, the arrival of Tesla and Volkswagen AG happened to coincide with the onslaught of about 50 startups alongside domestic automakers like Geely and the state-owned FAW Group. And according to Reuters, the enormous disparity between abundant supply and low demand is creating a desperate battle for survival – April new energy vehicle (NEVs) sales were down 43% from a year earlier.
“The difficulties that EV start-ups have encountered, such as the auto sales decline, harsh fundraising environment and subsidies reduction, all started last year,” said Brian Gu, president of Alibaba-backed Xpeng Motors.
And the coronavirus isn’t helping. In this country, the auto industry is suffering its stiffest ordeal since the ’08 recession, and with the global oil market in such dire straits (hitting negative figures per barrel), you’d think the climate would be perfect for EVs.
But China’s EV market was suffering from oversaturation before the coronavirus, and the global pandemic is the icing on top.
“The outbreak will aggravate these issues that already had existed,” said Brian Gu.
“Only the top-tier EV makers will be able to attract attention from investors in this environment.”
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