China has just announced its latest 5-year plan, and according to Reuters,* it makes no mention of new energy vehicles, which everyone assumes means direct financial support for zero-emissions vehicles will be coming to an end shortly. It does not mean, however, that China will stop supporting higher education or protecting its supply chain dominance.*
Electrive says the omission of NEVs marks a shift towards market-driven growth, according to industry analysts. NEVs were listed as strategic industries in the last three 5-year plans, which unlocked billions in subsidies that supported both automakers and consumers and bolstered the fortunes of BYD and CATL. Now China apparently has decided its car industry can stand on its own two feet.
Thanks to the incentives in those past three 5-year plans, China reached its goal of selling more than 50 percent NEVs ten years ahead of schedule, which is a clear indication of the power of planning. But having its domestic car industry focus all its attention on complying with government policy instead of consumer demand has resulted in Chinese manufacturers cranking out twice as many cars as there are customers for.
What does the above mean?
IMO a consolidation of China EV manufacturers. The marginal players will bankrupt and larger China EV manufacturers get a bit larger. EV & PHEV production for within China domestic market will be cut. But the push for greater export sales will accelerate as profit margins are greater for those sales. China EV manufacturers will have larger expense as they must build update & repair facilities to service the increasing number of EVs sold in the foreign markets.