In China, the world’s largest market for electric vehicles (BEV+PHEV+FCEV+HEV), major passenger car manufacturers are stepping up efforts to increase their production capacity for electric passenger cars. BYD, which has terminated the production of ICE vehicles and steered the company towards the production of all NEVs, has put seven plants into operation by the end of 2022. Great Wall Motor is also setting up a series of plants, and there are plans to mass-produce an EV model of MINI at a joint venture plant with BMW in 2023.

However, the current situation is that there is a surplus of production capacity for electric vehicles as a whole. For example, Hezhong New Energy, the top emerging BEV manufacturer in terms of production volume in 2022, will produce 152,000 units in 2022, with an annual production capacity of 280,000 units at the end of the same year, which, when simply divided, gives a plant utilisation rate of 54.4%. Weima Automobile, whose production and sales have been sluggish, has a production volume of 31,000 units and the same capacity of 150,000 units, resulting in a utilisation rate of 20.7%. This overcapacity was created because of high expectations of the expansion of the electric vehicle market by car manufacturers and misjudged demand, as well as because the National Development and Reform Commission, which is in charge of reviewing and approving projects to increase production capacity in order to expand the NEV industry, has tightened its review of ICE vehicle capacity growth The background to this was a bias towards increasing NEV capacity. If the surplus of electric vehicle production capacity continues to worsen, it is expected that the State Development and Reform Commission’s review of electric vehicle capacity expansion will eventually become stricter than in the past.