New players welcome

As the burgeoning NEV market gains momentum, analysts have warned of the possibility of overcapacity, suggesting that higher qualifications are needed for companies to enter the sector.

However, Miao, the former minister of industry and information technology, is not in favor of raising the threshold for new players to join the competition.

He said they are welcome as long as they use their own money, adding that competition is good for the industry and consumers.

But Miao said that local governments should avoid excessive activity in the sector — be it building plants to woo carmakers, or helping raise funds for them.

"These authorities should focus on their main responsibilities, such as creating a sound business environment and facilitating administrative procedures," he said.

"Local governments don't have much of an understanding of the auto industry," Miao added, citing bankruptcies of NEV startups, including Byton and Qiantu, in which such administrations were deeply involved.

"To err is human, but we should not make the same mistakes repeatedly," he said.

Miao said there is no systematic overcapacity in China's NEV sector, but added that to a certain extent overcapacity is conducive to the market's rapid development.

"We should curb overcapacity in the gasoline vehicle segment, and consider how to tap into their overcapacity for NEV production," he said.

China's annual production capacity for passenger vehicles, including NEVs and gasoline-powered models, stood at 40.89 million by the end of 2021, according to the China Passenger Car Association.

That year, passenger vehicle sales in the nation reached 20.15 million, including 2.99 million NEVs. Passenger NEV sales more than doubled to 6.49 million last year, while total passenger vehicle deliveries stood at 20.54 million, almost the same as in 2020.

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