A Chinese investment company claims that just 1 per cent of China’s electric vehicle startups will make it in the long run.
NIO Capital says that the huge costs involved in starting an electric vehicle company from scratch is the main reason why 99 percent of the will fail.
NIO Capital? Yes, that’s the name of a venture capital fund that’s partly backed by Chinese electric vehicle startup NIO. Take what they say with a grain of salt then.
During an interview with Bloomberg, managing partner Ian Zhu appeared pessimistic about all of the so-called ‘Tesla killers’ emerging out of the country.
“It’s a very complicated system that needs abundant investments and a large group of people to be able to build a car from scratch. Therefore, the survival rate of all these EV startups will be very low,” Zhu said.
More than half of the world’s electric vehicles are sold in China, so it’s no surprise that local entrepreneurs are looking to make their mark on the industry.
Competition is set to intensify in the coming years following the nation’s decision to allow foreign car brands to fully own their local units, encouraging the likes of BMW and Tesla to intensify their EV focus in China.
However, the ongoing trade war between the United States and China will make things more difficult than they need to be. According to Zhu, the trade war is an obstruction to the global economy and technology development.
“If it continues or escalates, it will delay the commercialization of intelligent electric cars as well as slow down global efforts to improve traffic safety and efficiency”, he commented.
NIO is making a serious run to establish itself as a formidable contender in the Chinese EV sector. The company recently started local deliveries of its ES8 SUV and claims to have already received 15,000 orders.