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According to a Bain consultant, China’s electric vehicle business is headed for “inevitable” consolidation

According to Helen Liu of Bain & Company, the electric car market is experiencing its “most exciting moment” now, and consolidation is unavoidable.  Liu, a partner at the consulting company, told CNBC’s “Capital Connection” that “consolidation is an unavoidable tendency in this market.” She mentioned factors such as the capital-intensive and technology-intensive characteristics of the electric vehicle industry.

“Historically, we have seen unseen hands such as the market, as well as visible trends, rules, and have guided the industry via the consolidation trend,” she said. China’s industry and information technology ministry said that the country had “too many” electric vehicle manufacturers. Following earlier efforts in other industries like private education and technology, those remarks aroused fears of more regulatory intervention by Beijing, this time aimed at the autonomous car sector.

Huaibin Lin, who works at IHS Markit, believes that Beijing would not step in in the immediate term. He told CNBC’s “Squawk Box Asia” that calls from ministry in charge of the industry and information technology for auto industry strengthening are not latest and have been happening for the past 20 years. “We are in an ever-increasing industry where we have seen a significant increase in vehicle… sales for the last 20 years,” said Lin, IHS Markit’s China automotive manager. He went on to remark that the market for alternative fuel vehicles is currently getting traction.

“Will there be a lot of consolidation inside the industry? As long as demand keeps going, we think it’s a major question mark,” he said. Liu of consulting firm Bain agreed, stating that the sector’s growth momentum and prognosis are both looking very promising at the present. Supportive policies and, most crucially, client approval all contribute to this.

“Relying on the Bain assessment this year, we discovered that Chinese buyers’ acceptance of electric vehicles is leading worldwide trends, and we believe that trend is continuing,” she said. As per business database Qichacha, China’s electric car market is experiencing significant expansion, with thousands of enterprises joining on board and the shares of the Chinese electric car manufactures such as Xpeng and Nio surging.

On the other hand, China has added that by 2025, it wants 20 percent of the new cars sold to be electric vehicles. Nevertheless, the two analysts feel it is too early to tell who would win the electric vehicle market in China. “I believe it is a little too early to predict which brand or name would prevail in the end,” Liu of Bain said.

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