The EV market is not as it was a few years ago. It’s not even close to what people expect it to be right now. You see, over the years, EVs have always been seen as the future of the automaker world. But of late, it has proved to be the complete opposite. EVs have led to some companies counting losses in millions of dollars all over the world. Even the EV automakers that specialize in EVs are counting losses. On the other hand, there are EV makers in China that have suffered losses to the point where they have gone bankrupt. But why is this happening?
Hello everyone, and welcome back to our channel. Today, we will look at the reasons behind Chinese EV makers going bankrupt. But before we continue, make sure you leave a like and subscribe to our channel for more amazing updates on your favorite cars. And with that, let’s look at the reasons that are making Chinese EV makers go bankrupt.
A few years ago, there were reports of hundreds of EV makers in China coming up with new technologies. They were all ambitious to take over the global market, wishing to take a hold of the market and be at the top. However, the reality is completely different from what everyone expected. It is now obvious that there is not enough room for all of them. Just an overview of the problems they are facing: the markets are oversaturated, there is not enough capital for everyone, and the price war is not making things any easier. This has led most of these Chinese EV makers to declare bankruptcy and just die a natural death.
One of the results of these companies declaring bankruptcy is the EV graveyard. Just think of it as a place where EVs are dumped. Most large cities across China have one of these, which have hundreds, if not thousands, of abandoned EVs. What’s even more interesting about this is that they all have license plates, which means that they were bought and registered at some point. But how did they all end up like this?
This is a mystery on its own. However, experts are claiming that this was some kind of scheme. Given that most of these abandoned EVs were initially purchased by car sharing companies, it all makes sense.
The beginning of all this was two decades ago, when the Chinese government decided to invest billions in what they referred to as new energy vehicles. These are simply vehicles that run on alternative sources of energy, including hybrids, plug-in hybrids, EVs, and hydrogen fuel cell vehicles. By the end of the first decade of the 21st century, it was clear that EVs were the only way to catch up with western legacy car makers.
The government went ahead and started pouring millions into startup companies, and with time, the number of EV makers rose to about 500. However, anyone could tell that this wasn’t going to last for long, more so when the government started giving stricter conditions for incentives. One of the conditions was to start selling vehicles in certain volumes. This was not proving to be easy.
As a result, most of the small startup companies with limited capital became desperate to figure out new ways to get the subsidies they needed. What’s that if not an organized scheme? A lot of people are convinced that these companies were selling EVs only to ensure incentives, while car sharing companies never had any serious intentions to use them regularly.
There are other people who are convinced that it is, in fact, the opposite. They have pointed out that these graveyards are filled with first-generation electric vehicles that were not able to keep up with the change in technology and quality. They have also said that this is nothing but a natural process, where most startups end either in bankruptcy or being bought by a larger player.
With this, about 90% of the startups practically don’t exist anymore. But at the end of it all, it’s just a matter of time before all those walking-dead companies declare bankruptcy. When this happens, the practical numbers might become official, and we would be able to see where we are with all this.
With all the struggles to keep making EVs, there has been a great wave of bankruptcy that has been going on. More Chinese EV companies are declaring bankruptcy, while others are in the danger zone of doing the same. To understand how serious this is, about five Chinese companies have declared bankruptcy in the past few months. Some of them were even considered to be quite perspective, but that all changed.
Experts have claimed that there are at least 20 more companies that are expected to declare bankruptcy this year.
We cannot forget WM, one of the most recent cases of bankruptcy. This is an EV maker that was very promising, especially when we consider that it was one of the startups with the largest capital, estimated at $5.3 billion.

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