China aims to have 5 million electric cars on its roads by 2020. Source: Pixabay

Most of China’s electric car startups could be driven out of the industry

THE Chinese government is foisting stricter regulations on new manufacturers in its growing electric car industry, which could see about 90 percent of electric vehicle startups facing the ax.

Bloomberg first reported that the new standards are “aimed at weeding out the weak”, according to a senior executive at a state-supported auto manufacturers’ association. Only two startups have been approved by the government to manufacture the cars, with three others saying they too plan to apply for permits.

There are over 200 electric vehicle companies in China. They were mostly fueled by the country’s push for more alternative-energy vehicles to address air pollution and smog in major cities like Beijing, which became a crisis earlier this year when the air was so toxic that the public were warned not to leave their houses.

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High-profile investors such as Jack Ma have pumped at least US$2 billion into the industry, and generous subsidies have made way for a “gold-rush mentality”, which in turn has led to market over-saturation worries.

To curb the problem, the Ministry of Industry and Information Technology (MITT) will consider capping the number of electric car startups to just 10 – not including big-name carmakers such as SAIC Motor Corp. and BYD Co.

The government will also be implementing stricter standards for quality control, according to Bloomberg, and the MIIT also posted a draft policy document for public consultation listing 17 technologies that electric vehicle companies must have.

The technologies include a control system to ensure performance and stability of the vehicles, an information system to track sources and conditions of parts, and a recycling process.

Just two weeks ago, the National Development and Reform Commission (NDRC) made plans to include domestic carmakers and importers of cars that use fossil fuel in a national carbon trading scheme to encourage the manufacture of electric vehicles.

According to Fortune, the companies that earn carbon permits by reducing carbon dioxide emissions can sell them, while those who exceed the volume of emissions allowed will have to buy them.

China aims to have 5 million electric cars on its roads by 2020. It is also the world’s largest electric bus market right now with about 173,000 plug-in electric buses, and is expected to account for more than 50 percent of the global electric bus market by 2020.