Deserted Factories Show China’s Electric Car Boom Went Bust
Visitors to Byton Ltd.’s website are greeted with color-saturated images of shiny electric cars gliding along manicured streets. Those paying a visit to the automaker’s factory in Nanjing, eastern China may be less impressed. (Pictured: deserted EV factories in Nanjing)
The plant is modern and huge, gleaming under the hot summer sun. But there’s total silence. Production has been suspended since the pandemic began and there’s no one around except for a lone security guard.
It’s a similar situation across town at Bordrin Motors. Weeds dot the factory’s perimeter and there’s a court notice pasted to the main gate announcing the electric carmaker’s bankruptcy.
Bordrin and Byton represent the flip side of China’s EV success. While home-grown stars like Nio Inc. and Xpeng Inc. have gone on to raise billions of dollars and are now selling cars in numbers that rival Tesla Inc., scores more have fallen by the wayside, unable to raise the crazy amounts of capital needed to make automobiles at scale.
In many cases, they were lured into existence by provincial governments dangling cash and other incentives to make Beijing’s dream of turning China into an EV powerhouse a reality.
Local authorities helped manufacturers set up factories that promised jobs and development — if they succeeded. But the tide began to turn in November when regulators asked regional governments to review and report back on the scale of their support for the auto industry.
Alarmed by unbridled investment in the sector — and the bankruptcies and zombified factories that came with it — Beijing is applying the brakes.
“We have too many EV firms,” Xiao Yaqing, China’s minister for industry and information technology, told reporters on Sept. 13. Mergers and acquisitions will be encouraged as the market needs to be further concentrated, he said.
The government is also looking at setting production limits for the EV sector, people familiar with the matter told Bloomberg News this month, with provinces unable to green-light new projects until surplus capacity comes online. Resources will also be channeled into a few select EV hubs.
The moves are a potential warning sign for investors who have poured money into electric carmakers and the technologies that support them over the past year.
There are some 846 registered automobile manufacturers in China, and more than 300 of them churn out new-energy cars, loosely defined as electric vehicles or plug-in hybrids.
The vast majority are names unrecognizable elsewhere. In 2020 alone, the country added new production capacity of around 5 million units, about four times the actual number of EVs sold in China that year. According to regulators, almost half that capacity wasn’t in use.
Bordrin, founded by former Ford executive Huang Ximing in 2016, was targeting annual output of 700,000 cars across three factories. But it ran out of money and folded before making even one. Huang didn’t reply to messages seeking comment sent via WeChat.
China doesn’t have a public dossier of bankruptcies, but since last year, at least a dozen EV makers are known to have gone under or have had to be restructured to avoid insolvency.
“This is kind of the classic capitalist competitive shakeout,” said Gary Dvorchak, a Beijing-based managing director at investment advisory Blueshirt Group LLC. “You get a zillion companies and then you have an oversupply situation. The process of failing is typically a lot slower in China because companies get government support. But eventually, some have to die and the pain inflicted to get those deaths to happen can be high.”
Byton at least still exists. The carmaker, co-founded by former BMW AG and Nissan Motor Co. executives, suspended all domestic operations and furloughed staff in July last year as the pandemic made it tougher to get its business off the ground.
Even before COVID, the company had encountered difficulties meeting announced deadlines on producing and delivering its first model, although its website still accepts reservations for cars.
‘Idle capacity’
Things started to look up this year, when Byton signed a strategic cooperation deal with iPhone maker Foxconn Technology Group in January (aided by the Nanjing Economic and Technological Development Zone) to start mass production of the Byton M-Byte SUV by the first quarter of 2022.
But Foxconn has been withdrawing staff from the Nanjing plant after one of the carmaker’s biggest creditors started taking management control, Bloomberg reported in July, and last week, the Nikkei newspaper said the collaboration had been put on hold due to Byton’s worsening financial situation.
A representative for Byton declined to comment on this story.
Jiangsu province, where Nanjing is located, strove to become an EV hub, luring $32 billion of auto-industry investment in the six years through 2020. Now, it’s home to more than 30 car manufacturers.
But it became the focus of a Beijing-ordered probe earlier this year, which found some local authorities had been doling out tax breaks and land incentives to attract carmakers that were beyond the scope of government guidelines.
This resulted in “salient problems of low production capacity utilization rates and idle capacity,” Jiangsu provincial officials said in a statement in February, without elaborating.
“Local governments had high expectations for the development of new-energy vehicle companies, hoping to tap the opportunities of the sector and drive local economic expansion,” Cui Dongshu, secretary-general of China Passenger Car Association, said in an interview. “Investors also saw huge profit potential. This has resulted in surplus capacity.”
Yinlong New Energy Co.’s Nanjing factory broke ground in 2017 with a total planned investment of 10 billion yuan (US$1.6 billion). Output was set at 30,000 new-energy commercial vehicles, mainly electric buses, and there were EV battery-making plans too.
Production was due to start in 2018 but today the plant is all but abandoned. Trash has piled up along its walls and roads connecting buildings inside are deserted, its entrances barricaded.
The company’s biggest shareholder, Gree Electric Appliances Inc., said there’s still scope for collaboration, either in bolstering the carmaker’s capacity utilization and competitiveness or in pushing its battery technology.
Some of China’s established automakers are watching all of this with a sense of inevitability. Zhejiang Geely Holding Group Co., one of the nation’s biggest privately owned carmakers with a range of brands spanning mass-market vehicles to ultra-luxury racing cars made by Lotus — which it controls — sees a natural cycle playing out, and one that will involve some casualties.
“Some people rush to build one, two, three, five factories, even though their first car isn’t yet on the market,” Group Lotus Plc Chief Executive Officer Feng Qingfeng said.
“When everybody thinks it’s easy to make cars, people dive into car making. When they realize the car business isn’t that easy, they stop investing,” he said. “It’s the invisible hand of the market economy commanding order.”
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Jerry Krause
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Hi Frequent PSI Commenters and PSI Readers,
Some of you may have watched the Olympics and even the Para-olympics. The point of this comment is a very few people have some really exceptional skills and have worked VERY HARD to FULLY DEVELOP these SKILLS. THINK–WARREN BUFFET!!!
Yes, it maybe only hours since this article was posted; but how many commentS will have been written in the next 24hrs. or in the next week???
Unlike is the case of many articles posted here, I believe what I have read to be the observed TRUTH. Why do I believe this? One reason is that In Salem OR where I have lived now for nearly 20yrs and have visited my wife’s family for 50 yrs, I know that a very large physical building was built to house an operation growing large single crystal Ignots from which make solar panels are made. And its vacant building has been converted to an Amazon Warehouse.
And I have read that many NEW Businesses commonly fail in a few years. And I have read that the board of directors of APPLE fired Steve Jobs, after which he got involved in a small company which became very profitable so that he came back to failing APPLE and made it VERY ECONOMICAL again!!! The point being not all mangers are GREAT MANGERS even if the NEW INDUSTRY is relatively SUCCESSFUL. For the NEW SUCCESSFUL COMPANIES buy up the UNSUCCESSFUL ONES at BARGIN PRICES.
However, the BEST EVER MANAGER cannot make never make a business ECONOMICALLY SUCCESSFUL if the business is based upon ABSOLUTELY WRONG SCIENTIFIC IDEAS such as the GREENHOUSE EFFECT OF ATMOSPHERIC CARBON DIOXIDE (GHE). UNLESS, of course, the BUSINESS IS A GOVERNMENT CONTROLLED BUSINESS!!!
Have a good day, Jerry
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LLOYD
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Warren Buffet is a B.S. artist.
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Howdy
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Reminds me of the solar panel scramble in UK. Now well and truly over, with the installers that sprung up over-night gone bust.
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dnomsed
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‘Made in China’… Definitely inspires confidence… Lol.
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Jerry Krause
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Hi Dnomsed and PSI Readers,
Dnomsed, you seem to forget that a lot of products we purchase in the USA say Made In China. And from my experiences I must conclude they are QUALITY PRODUCTS for WHAT THEY COST me.
Readers, do you forget (IGNORE?) that two nations (China and India) of the WORLD clearly have a BIG POPULATION PROBLEM!!! That is a lot of mouths to feed and a lot of WORKERS to keep being PRODUCTIVE!!! And what I read indicates that ‘Communist’ China is being much more successful than India with their Caste Social SYSTEM.
You should recognize that many PEOPLE still want to get into the USA so they can PRODUCTIVELY WORK and SEND SOME MONEY back to Families back HOME where there is no WORK!!!
PONDER. what can observed if one cares enough to LOOK!!!
The SAME if TRUE in SCIENCE, I have attempted to draw attention to OBSERVATIONS (DATA, the FOUNDATION of SCIENCE), but the EVIDENCE here at PSI is that very FEW are READING IT!!!
Have a good day, Jerry
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Richard Noakes
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It is all in the batteries. It is what killed electric car production back in the early 1900’s and it is the same problem now.
Electric cars are fine, if you don’t have to wait for hours for them to recharge and battery life is reduced with each battery charge and the costs of replacing old batteries is more than you originally paid for the car when you got it new.
Add to that, battery fires. like with those reported with Tesla cars and who would want an electric car, anyway?
Seems to me that the hydrogen cars are ideal for the future, pour water in one end and a small converter, converts the water into hydrogen and oxygen (H2O) and the engine runs on the hydrogen component and apparently “you” can drink the water which comes out of the exhaust, it is that clean.
Can’t wait to convert my 3 cars into water powered ones, antiques all by today’s modern car standards !!
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Herb Rose
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Hi Richard,
You pour water into the car, then get the same water out. Where does the energy to run the car come from? Another perpetual motion machine.
Herb
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sszorin
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A wrong assumption; unless you can prove that the same amount of water that ‘goes in’ then ‘comes out’.
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Herb Rose
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Hi Sazorin,
The reaction is simple. H2O + energy > H2 + O + heat > H2O + energy. There is no matter destruction. The problem is that you need a lot more energy to split the water than useful energy (work) you get out of it.
Herb
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Jerry Krause
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Hi Richard and Herb and PSI Readers,
Richard, very good comment (SATIRE)!!! It seems many believe the MAGIC of GETTING SOMETHING FOR NOTHING.
Herb, here at PSI I read a lot about the SCIENCE of THERMODYNAMICS relative to the wrong idea of the Greenhouse Effect of atmospheric Carbon Dioxide (GHE). I do not read much about the FACT that Thermodynamics is about the CONVERSION OF HEAT ENERGY (STEAM ENGINE) into USEFUL WORK.
Thermodynamics has nothing to do with the idea of the GHE but it certainly has EVERYTHING td do with GETTING SOMETHING FOR NOTHING!!!
Have a good day, Jerry
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JaKo
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Hi Jerry,
I beg to differ: “Thermodynamics has nothing to do with the idea of the GHE…” Heat transfer is a branch of Thermal Physics aka Thermodynamics. Just czech this out — it is a sophomore level physics, but the “Next” (laws of thermodynamics) brings you pretty close to dismissing the GHE misconception…
https://users.aber.ac.uk/ruw/teach/215/thdn.php
You take care Jerry, JaKo:
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Jerry Krause
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Hi JaKo,
First, my compute is misbehaving but I will try to make this comment because I consider what I will quote to be critically important
You wrote: “Heat transfer is a branch of Thermal Physics aka Thermodynamics.” Which I admit I do not understand how it refutes my statement.
In ‘Physical Chemistry 2nd Ed.’, by Daniels and Alberty, I read: “In the late nineteenth century it became apparent that classical mechanics was unable to account for many experimental facts concerning the behavior of systems of atomic size. The quantum hypothesis was introduced in 1900 by Planck as a result of this theoretical study of the radiation of hot bodies. Quantum theory has been developed on the basis of many different kinds of experiments involving electrons, atoms, molecules, and other small particles. For objects of larger size quantum mechanics reduces to classical mechanics.”
Hence, I conclude that anyone, who does not consider the PHYICS of the twentieth century, is not playing with the FULL DECK of MODERN PHYSICS!!!
Nor do I consider that ANYONE who measures quantitative data, such as air temperatures, for a hour and then averages it, and does not report the maximum and minimum temperatures measured during that hour, has never actually done QUALITY quantitive measurements. So how could they begin to understand what I write???
For I read that Einstein stated: “The only source of knowledge is experience.”
Have a good day, Jerry
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Jerry Krause
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Hi JaKo and especially other PSI Readers,
First implemented in 2002, the U.S. Climate Reference Network, or USCRN, is a sophisticated climate-observing network of 114 stations across the Lower 48, which NCEI specifically designed and deployed for quantifying climate change on a national scale. The USCRN is still expanding in Alaska with 13 out of 29 planned stations already in place. Two stations on the Big Island of Hawaii are also part of the network. But what exactly is a USCRN station and what all does one entail? Read More: (https://www.ncdc.noaa.gov/news/picture-climate-what’s-uscrn-station)
“Stations are sited in stable, open locations. Instruments are calibrated to NIST standards. Triplicate sensor configuration for the primary measurements of temperature and precipitation, internal consistency assures quality, redundancy protects continuity. Ancillary measurements support the primary measurements: global solar, surface IR temperature, low-level wind, wetness. Additional measurements: soil moisture, soil temperature, relative humidity Read more:
(https://www.ncei.noaa.gov/pub/data/uscrn/documentation/site/photos/stationsbystate_lores.pdf)
(https://principia-scientific.com/the-corvallis-or-uscrn-site-a-natural-laboratory-part-two/). Example of USCRN data. Especially note (Figure B) the rapid decrease of air temperatures after midday by hour to hour during the afternoon, the much less rapid decrease during the nighttime until after sunrise when the air temperature begins to increase during the morning hours at nearly consistent rate by hour to hour until midday.
This common general pattern of the diurnal atmospheric temperature oscillation, during an apparently cloudless atmosphere is unquestionable evidence that little, to nothing, is inhibiting the diurnal emission of IR radiation toward space.
While at the same time there is something which appears to be generally reducing the incident solar radiation from day to day.
Have a good day, Jerry
Jerry Krause
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Hi JaKo and especially PSI Readers,
I had never liked my possible explanation—decreasing incident solar radiation—for the decreasing maximum air temperatures for these 5 days.
Previously I had written a rambling essay (https://principia-scientific.com/dr-jerry-l-krause-how-stupid-am-i/) because I had forgotten about dew. Now I do not forget about dew and have reviewed the RAWS (Remote Automated Weather Station) atmospheric DEWPOINT Temperatures at 7am (sunrise) and 12pm for the 5 days.
34/38, 33/43, 35/48, 38/48, 35/47F
Hence, the evidence is that a greater portion of the same incident solar radiation is being consumed to evaporate more dew during the morning of the following day with the result that the maximum air temperature at midday is less than that the day before.
However, I now see 3 things that should have been referenced: the actual times of the 5 days of data (sunrise 10/17/2018); the link (https://wrcc.dri.edu/wraws/orF.html); and I did forget dew again (for the data I just listed can be seen in Figure A of the same link as Figure B).
Now I like this new, different, explanation!!! But, I never intended to produce a series of comments which became shorter and shorter. So this comment is an experiment to see what the result will be.
Have a good day, Jerry
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Doug Harrison
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I have read that China also has an energy problem. I wonder if they have pulled the rug from under large number of EV manufacturers to help keep demand for electricity down.
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Tom
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China is still a Communist country in many respects. So much of the Chinese economic miracle is faked in order to make Communism look like the answer to all economic ills. Heck, it’s even imported to the US.
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Feather weight day
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Feather weight day
Deserted Factories Show China’s Electric Car Boom Went Bust | Principia Scientific Intl.
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