E-car overcapacity looms large

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A worker works on electric cars at a plant in Zouping county, Shandong province. The fast-growing new energy vehicle sector now faces the risk of overcapacity. [Photo/Xinhua]



China's fledging new energy vehicle sector is confronted with the risk of severe overcapacity as traditional automakers and fresh faces are rushing to exploit the segment that is believed to be the largest gold mine of the automotive industry.

On Tuesday, Wanxiang Group won the nod from the authorities for its plant in Zhejiang province, which will be able to produce 50,000 electric cars per year when completed.

The move made the giant auto parts supplier the sixth company approved to jump on the wagon of electric car making in China this year.

The six newcomers' annual capacity will reach a combined 1.13 million units per year around 2020.

The figure exceeds 2 million units when coupled with those from NextEV, Chehejia and LeEco, all dotcom companies.

Traditional automakers have even more ambitious plans. Public statistics show that the combined annual capacity of 13 major passenger carmakers including BYD, SAIC Motor and JAC Motor will exceed 4 million units by 2020.

That means China will be able to produce about 7 million new energy vehicles a year by the end of the decade, more than three times the goal the country has set: 2 million units sold annually in 2020.

The simple math shows plants with a combined capacity of around 5 million units will stand idle even if China manages to fulfill the ambitious target, and some suggest an even worse scenario as the goal would be difficult to achieve considering the sector's current performance.

China sold 400,000 new energy vehicles from January to November this year for year-on-year growth of 60 percent, according to statistics from the China Association of Automobile Manufacturers.

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