A report by consultancy AlixPartners predicts that only 15 of the 129 brands selling electric vehicles (EVs) and plug-in hybrids in China will be financially viable by 2030.

These surviving brands will likely control 75% of the market, averaging annual sales of 1.02 million units each.

Stephen Dyer, head of AlixPartners’ automotive practice in Asia, said China’s consolidation may move slowly due to local government support for struggling automakers.

Despite being the largest auto market, China faces overcapacity and a price war that threatens profitability, with only BYD and Li Auto turning annual profits.

Although regulators want price wars to end, competition is expected to continue via indirect methods like insurance subsidies and zero-interest financing.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ China’s EV consolidation follows a deliberate policy-driven market creation

The current consolidation phase represents the natural evolution of a market deliberately created through massive government investment and subsidies.

Between 2009 and 2017 alone, China invested over RMB 390 billion ($58.3 billion) in new energy vehicles (NEVs), with RMB 245 billion ($36.6 billion) allocated specifically to buyer subsidies1.

This government support has been so substantial that it constituted over 42% of all NEV sales during this period, creating an artificially accelerated market that was bound to face consolidation1.

The roots of this strategy trace back to the early 2000s when China launched the “863 EV Project” in 2001, establishing a comprehensive policy framework for technology development and market transformation2.

The projected survival of only 15 brands reflects consolidation patterns in other industries where government-stimulated growth created initial overcapacity before market forces drove rationalization.

2️⃣ The overcapacity crisis reveals systemic issues in China’s industrial policy

The current 50% capacity utilization rate at Chinese car plants represents the lowest level in a decade, highlighting how industrial policy can create structural imbalances.

China’s industrial approach emphasizes supply-side measures and investment-driven growth, which frequently leads to overproduction when not matched with equivalent consumer demand3.