Chinese new electric vehicle manufacturers will limit access to factoriesJune 4, 2019
The industry is growing too fast and the country’s leadership fears a collapse
The Ministry of Industry and Information of China intends to limit the activities of startups involved in the development of electric cars. Now 486 such companies are registered in the country, and the ministry fears that an uncontrolled increase in their number could lead to a collapse similar to the “dotcom crisis”.
According to sources from Bloomberg, the draft of the new rules is aimed at companies that transfer the production of electric cars to third-party firms. The document will clearly define the criteria for when outsourcing will be possible. This will artificially limit the entry of new players into the market and will help more competitive companies.
The dotcom bubble emerged at the end of the millennium as a result of the rise of shares of Internet companies and the emergence of new market participants. It would burst in March 2000, when the NASDAQ Composite index of high-tech companies collapsed: hundreds of companies became bankrupt or were liquidated, and some of the leaders received jail sentences for fraud and embezzlement of shareholders.
Insiders claim that new startups who want to use the production facilities of other companies will have to invest $ 580 million in research activities in China over the previous three years. The total world sales for two years at the same time should be 15 thousand cars, and the size of the paid-up part of the share capital – one billion yuan.
In addition, contracts under the new rules will be possible to enter into a maximum of two plants. The minimum term of the agreement is three years, the annual production is at least 50 thousand electric cars.
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