Shenzhen is one of the biggest technology centers for China. Here all the taxis are operated with electricity. The energy vehicles are also quite common in the other big cities of the country. Along with big brands like Tesla, there are other local car markers which manufacture these highly advanced cars.
As per the recent statistics, China is the largest electric car maker of the world. The key factor behind this immense success has been ample amount of subsidy to the automobile firms. Now the Chinese government is gradually taking away this subsidy support. This might hurt the sentiments of the investors. The market experts are warning that this might led to failure and losses amongst several startup electric car makers of the country.
Beijing has decided to reduce the subsidy rate by almost 50% of the present amount. This will be implemented on June 26, 2019. The reduction rate will be within 45–60%. Vehicles which have range below 250km will not be provided with any subsidy. Market analysts speculate that this might led to market consolidation. Bill Russo, who is the CEO of Automobility Limited informed that in this process the weak car makers will get eliminated from the market.
The Chinese car makers who are manufacturing their first electric vehicle informed that they are certain that they will survive this challenge. These car makers are of the opinion that the low end car makers might not be able to sustain in this economic environment. Freeman Shen, who is the CEO of the WM Motor informed that this incident might led to boost in their car sales. According to the CEO, the reduction in subsidy will eliminate several low key players in the market. For this reason customers will be compelled to resort to the high end car makers like WM Motor.