The rapid growth of China’s EV market has been spurred by government subsidies to encourage consumers to switch to cleaner automobiles. Total central government subsidies for new-energy vehicle purchases stood at 33 billion yuan ($5.1 billion) in the five years through 2020, Ministry for Industry and Information Technology data show.
In response, provincial authorities have offered tax breaks and other incentives for EV manufactures to set up shop, leading to overcapacity. Jiangsu province, north of Shanghai, for example is now home to around 30 automakers, several of them bankrupt.
The average production capacity utilization rate for automakers in China overall was about 53% last year, according to calculations based on a Jiangsu province submission to the National Development and Reform Commission earlier this year.