The economic crisis generated by the covid-19 pandemic has begun to affect Chinese startups that manufacture and sell electric-powered cars, according to Reuters. These companies were already in a tough spot in 2019, when sales of new energy vehicles (NEVs) fell 43% in a market that now has about 50 startups competing with big names like Geely, Tesla and Volkswagen.

Despite the subsidies offered to electric vehicle manufacturers and the tax incentives applied to their purchase, market analysts fear that this technology will become even more unpopular with the drop in fossil fuel prices and the economic slowdown.

Chinese manufacturer BYD’s figures exemplify this reality. In March of this year, BYD sold 10,433 vehicles while, in the same period in 2019, its sales reached the range of 30 thousand. Due to this trend, the manufacturer recorded an 85% drop in profit in the first quarter of 2020.

However, CPA (China Passenger Car Association) secretary-general Chi Dongshu reported that some startups swam against the tide and achieved good sales during that period like Nio Inc, Xpeng Motors and Li Auto, for example.

“With 3 billion people in lockdown worldwide and reduced mobility in general in all modes, there is a forecast of reduced sales of electric vehicles, but it is expected that different behaviors will occur in different markets”, explains Fernanda Delgado, professor and researcher at FGV Energia, to Autoesporte magazine.

Cuts to survive
In view of the current scenario, several startups in this market are resorting to cuts to keep themselves active. Manufacturer WM Motor, which reached 17,000 sales in 2019, said it canceled performance bonuses due to failure to meet targets during the year and delayed payments of annual bonuses and employee subsidies. Some smaller manufacturers have resorted to pay cuts and layoffs.


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