Jun 20, 2019 (China Knowledge) - Back in March 2019, China announced plans to reduce subsidies for electric cars and raise technological standards needed for vehicles qualification. The move that was announced three months back continues to dampen China’s new energy vehicles (EV) market.
China has been encouraging wide use of green cars to reduce pollution over the past decade. Since 2009, the government has been giving subsidies to EV buyers and the subsidies peaked in 2014.
These policies have spurred numerous EV starts up competing not only with domestic automakers but also global automakers. In fact, Tesla plans to start production in China this year.
It is estimated that there are 330 EV companies registered with the government for subsidies.
When the Chinese Ministry of Finance announced tougher subsidy policies in March 2019, vehicles prices rose. Sales of EVs in May grew only 1.8% YoY compared with 18.1 % in April and 62% in 2018.
Daniel Kircher, CEO at Nanjing-based EV maker Byton said that starts up must require utmost cost discipline in order to survive the current funding environment.
Byton is backed by state-owned automaker FAW Group and batter supplier Contemporary Amperex Technology Co (CATL). It is said that the company is seeking USD 500 mln in funding.
Meanwhile, WM Motor Technology Co Ltd which is backed by Baidu Inc closed a successful funding round of USD 446 mln in March.
Nio receives funding from E Town Capital, a Beijing government investment firm, through the means of setting a joint venture to help Nio build its own plant.
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