There is no direct competition between iPhone assemblers, e-commerce providers and real estate developers, but in China's electric vehicle sector, these companies are starting to compete.
This is because the huge shift in the market to electric vehicles has stimulated billions of dollars in investment by traditional automakers, start-ups and Internet companies, e-commerce companies and real estate giants. Even if the government reduced the huge subsidies to the industry, this boom continues.
At present, there are 486 electric vehicle manufacturers registered in China, more than three times as many as two years ago. Although passenger car sales are expected to reach a record 1.6 million units this year, it may not be enough to sustain the survival of all car companies, which has triggered a warning that the expanding electric vehicle market may collapse, leaving only a few survivors.
Thomas Fang, partner and strategic adviser to Roland Berger in Shanghai, said: "We will see that the electric vehicle industry is setting off a huge wave. This is a crucial moment in determining the survival of electric vehicle start-ups."
At least 24 of these electric car brands will be on display at the Shanghai Auto Show, which opened this week. These manufacturers include the founding electric super-running manufacturer, including Wei Lai, which is already listed in the US, and of course, traditional car companies like BYD.
In recent years, dozens of start-ups have entered the ball electric vehicle market, raising $18 billion since 2011. But most fundraisers are Chinese car companies, including Wei Lai, Wei Ma, Xiao Peng and Ranger.
Together, these start-ups can produce 3.9 million electric vehicles a year. This figure does not include the electric vehicle production plans of traditional car companies.
The Chinese market is indeed big, but not as big as these companies imagine. According to Bloomberg data, in 2018, the sales of electric vehicles in China exceeded 1 million for the first time, which was largely stimulated by government subsidies. Under subsidies, the price of consumers purchasing each electric car can be reduced. Thousands of dollars.
However, according to data from the China Association of Automobile Manufacturers, the sales of electric vehicles accounted for only 4% of the total sales of passenger cars in China that year was 23.7 million.
At the same time, traditional car sales are currently plummeting. In March, China's passenger car sales were 2.019 million, down 6.9% from the same period last year. From January to March, passenger car sales were 5.263 million units, down 13.7% year-on-year.
Cui Dongshu, secretary-general of the China Passenger Car Federation, said: "The popularity of Chinese cars is relatively low, so there is still much room for growth in new energy vehicles. However, this market is prepared for competitive participants, not The weakest company, the latter will be out."
The Chinese government is promoting the development of electric vehicles to alleviate air pollution, reduce fuel dependence on imports, and develop high-tech manufacturing. By 2025, China hopes that the annual sales of new energy vehicles will reach 7 million, including pure electric vehicles, plug-in hybrid vehicles and fuel cell vehicles. This is equivalent to 20% of the entire Chinese automotive market.
This sales volume can only meet the production capacity of dozens of car companies. For a car company, to achieve profitability, they need to sell at least tens of thousands of car products every year.
At the same time, government subsidies are decreasing for these companies. The Chinese government encourages car companies to maintain their business through innovation, instead of relying on government support.
Zhou Lei, a partner at Deloitte in Tokyo, said: "With the adjustment of subsidies, some technologically less advanced electric vehicle start-ups will disappear. The industry will usher in a reshuffle."
At the same time, from Tesla to Volkswagen to Ford, these companies are also eyeing China's electric car market, they all want to produce electric cars in China.
Tesla began selling its first Volkswagen model, Model3, in China this year and plans to start producing cars in Shanghai before the end of the year. According to data from the Ministry of Industry and Information Technology, Tesla sold 14,467 vehicles in China last year.
Traditional car companies such as Toyota, FCA and Honda have chosen another faster way to get their electric cars into China: they will sell electric cars on their own, and the manufacturers of electric cars are partners in China.
Some well-known Chinese local companies, such as BYD, are more likely to survive the competition and subsidies. In the past few years, BYD has achieved good results. In addition to passenger cars, they also have bus and bus businesses, and they have a large consumer base.
As a car invested by Warren Buffett, BYD's revenue has ushered in growth over the past six years, and Bloomberg data shows that BYD has achieved profitability at least in 2000.
Wang Chuanfu, founder and chairman of BYD, said: "In the competition, only those companies with solid technical reserves can stand up. By mastering the core technology, we can see farther and deeper."
The biggest risk is the rising star who is still looking for a foothold. Many companies' founders or funders have an Internet or technical background. They are accustomed to high cash consumption rates, but they may not fully realize the huge investment required for car manufacturing.
Non-automotive companies that have invested heavily in electric vehicles include Foxconn Technology Group, Alibaba Group and China Evergrande Group. Evergrande, known for its real estate development, announced that it will become the world's largest electric vehicle manufacturer within three to five years.
Thomas Fang, partner and strategic adviser to Roland Berger in Shanghai, said that the investment required for actual production is several times their investment in marketing and product development. That's why we saw some of them (new forces in the car) postponing mass production plans.
Headquarters and production facilities in FaradayFuture, Calif., have not yet begun production of the first model. Founded by former BMW executives, the company said last month that it is seeking $700 million in funding. The company has raised $500 million in funding earlier this year and plans to start production later this year. Baiteng said that they need to complete the latest round of financing before they can start mass production later this year.
Li Xiang, founder and CEO of Chehe, said that start-ups need to get funding within next year, otherwise there is a risk of being eliminated. And since then, no investors have made a commitment to the newly established car company, even the leading start-ups are difficult to make a profit.
Li Xiang was one of the first people to own Tesla ModelS in China. After successfully launching the car portal car home, he founded his own company car and home in Beijing. The startup recruited talent from Daimler, Toyota and BMW and plans to deliver the first model in the fourth quarter, but the initial target is 2017.
Li Xiang believes that "a large number of startups will be eliminated within a year, and 90% of investors will suffer huge losses."