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Deserted factories show how China electric car boom went too far

There’s total silence.
Yinlong New Energy's Nanjing factory. Image: Bloomberg

Visitors to Byton’s website are greeted with colour-saturated images of shiny electric cars gliding along manicured streets. Those paying a visit to the automaker’s factory in Nanjing, eastern China may be less impressed. The plant is modern and huge, gleaming under the hot summer sun. But there’s total silence. Production has been suspended since the pandemic began and there’s no one around except for a lone security guard.

It’s a similar situation across town at Bordrin Motors. Weeds dot the factory’s perimeter and there’s a court notice pasted to the main gate announcing the electric carmaker’s bankruptcy.

Bordrin and Byton represent the flip side of China’s EV success. While home-grown stars like Nio Inc. and Xpeng Inc. have gone on to raise billions of dollars and are now selling cars in numbers that rival Tesla Inc., scores more have fallen by the wayside, unable to raise the crazy amounts of capital needed to make automobiles at scale.

In many cases, they were lured into existence by provincial governments dangling cash and other incentives to make Beijing’s dream of turning China into an EV powerhouse a reality. Local authorities helped manufacturers set up factories that promised jobs and development — if they succeeded. But the tide began to turn in November, when regulators asked regional governments to review and report back on the scale of their support for the auto industry.

Alarmed by unbridled investment in the sector — and the bankruptcies and zombified factories that came with it — Beijing is applying the brakes.

“We have too many EV firms,” Xiao Yaqing, China’s minister for industry and information technology, told reporters Sept. 13. Mergers and acquisitions will be encouraged as the market needs to be further concentrated, he said. The government is also looking at setting production limits for the EV sector, people familiar with the matter told Bloomberg News this month, with provinces unable to green-light new projects until surplus capacity comes online. Resources will also be channeled into a few select EV hubs.

The moves are a potential warning sign for investors who have poured money into electric carmakers and the technologies that support them over the past year.

There are some 846 registered automobile manufacturers in China, and more than 300 of them churn out new-energy cars, loosely defined as electric vehicles or plug-in hybrids. The vast majority are names unrecognizable elsewhere. In 2020 alone, the country added new production capacity of around 5 million units, about four times the actual number of EVs sold in China that year. According to regulators, almost half that capacity wasn’t in use.

Bordrin, founded by former Ford executive Huang Ximing in 2016, was targeting annual output of 700,000 cars across three factories. But it ran out of money and folded before making even one. Huang didn’t reply to messages seeking comment sent via WeChat.

China doesn’t have a public dossier of bankruptcies, but since last year, at least a dozen EV makers are known to have gone under or have had to be restructured to avoid insolvency.

“This is kind of the classic capitalist competitive shakeout,” said Gary Dvorchak, a Beijing-based managing director at investment advisory Blueshirt Group. “You get a zillion companies and then you have an oversupply situation. The process of failing is typically a lot slower in China because companies get government support. But eventually, some have to die and the pain inflicted to get those deaths to happen can be high.”

Byton’s factory in Nanjing. Image: Bloomberg

Byton at least still exists. The carmaker, co-founded by former BMW AG and Nissan Motor Co. executives, suspended all domestic operations and furloughed staff in July last year as the pandemic made it tougher to get its business off the ground. Even before Covid, the company had encountered difficulties meeting announced deadlines on producing and delivering its first model, although its website still accepts reservations for cars.

‘Idle Capacity’

Things started to look up this year, when Byton signed a strategic cooperation deal with iPhone maker Foxconn Technology Group in January (aided by the Nanjing Economic and Technological Development Zone) to start mass production of the Byton M-Byte SUV by the first quarter of 2022. But Foxconn has been withdrawing staff from the Nanjing plant after one of the carmaker’s biggest creditors started taking management control, Bloomberg reported in July, and last week, the Nikkei newspaper said the collaboration had been put on hold due to Byton’s worsening financial situation.

A representative for Byton declined to comment for this story.

Jiangsu province, where Nanjing is located, strove to become an EV hub, luring $32 billion of auto-industry investment in the six years through 2020. Now, it’s home to more than 30 car manufacturers. But it became the focus of a Beijing-ordered probe earlier this year, which found some local authorities had been doling out tax breaks and land incentives to attract carmakers that were beyond the scope of government guidelines. This resulted in “salient problems of low production capacity utilization rates and idle capacity,” Jiangsu provincial officials said in a statement in February, without elaborating.

“Local governments had high expectations for the development of new-energy vehicle companies, hoping to tap the opportunities of the sector and drive local economic expansion,” Cui Dongshu, secretary general of China Passenger Car Association, said in an interview. “Investors also saw huge profit potential. This has resulted in surplus capacity.”

Bordrin’s factory in Nanjing.

Yinlong New Energy’s Nanjing factory broke ground in 2017 with a total planned investment of 10 billion yuan ($1.6 billion). Output was set at 30,000 new-energy commercial vehicles, mainly electric buses, and there were EV battery making plans too. Production was due to start in 2018 but today the plant is all but abandoned. Trash has piled up along its walls and roads connecting buildings inside are deserted, its entrances barricaded.

The company’s biggest shareholder, Gree Electric Appliances, said there’s still scope for collaboration, either in bolstering the carmaker’s capacity utilization and competitiveness, or in pushing its battery technology.

Some of China’s established automakers are watching all of this with a sense of inevitability. Zhejiang Geely Holding Group Co., one of the nation’s biggest privately owned carmakers with a range of brands spanning mass-market vehicles to ultra-luxury racing cars made by Lotus — which it controls — sees a natural cycle playing out, and one that will involve some casualties.

“Some people rush to build one, two, three, five factories, even though their first car isn’t yet on the market,” Group Lotus chief executiveo fficer Feng Qingfeng said.

“When everybody thinks it’s easy to make cars, people dive into car making. When they realise the car business isn’t that easy, they stop investing,” he said. “It’s the invisible hand of the market economy commanding order.”

© 2021 Bloomberg


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More “green” bankruptcy!! Just like Solyndra and the $500 MILLION Barry Obama-Soetero supported. And S A wants to follow. Well I see massive corruption and malfeasance that will lead this spending spree (BY THE WAY FROM A GOVERNMENT THAT IS BROKE!!)

Finally, some sanity prevails. Perhaps it is not such a great idea to buy a car that can drive only 500km and then needs to be re-charged for anything from 1-12 hours. The electricity used is of course still generated by coal-fired power stations- so much for “going green”. All this nonsense is only possible against the background of bigger nonsense: the whole climate change story.


I’m on my second EV so have some experience:

EV have a range problem as a sole vehicle but as one of your cars it is unbeatable in city commuter role. Very fast, quiet, no smog, 300km range is fine for charging every few days.

Cost is huge advantage. Mine averages 14-15 kWh/ 100km so call it 25c/km if I used Eskom. Many EV owners have solar in any event. Maintenance is basically just tyres.

If I were in charge I would mandate to start with electric buses then city delivery trucks : the main smog culprits and they tend to have a depot where one charge overnight in offpeak tariffs.

SA has fewer recharge stations but so far I don’t have a problem. More and more stations pop up and nice for me is that the BM stations are free and usually preferred locations at malls. Basically like disabled bays 🙂

Only privileged people can have two cars with one being an Additionally you say that your car’s only maintenance item is tyres. So do you never replace break pads, windscreen wipers, cv joints, shock absorbers etc?


To dat

jnrb : to date my services five years:
– key remote batteries replaced
– brakes checked, did nothing
– no oil, oil filters, wipers, etc

My second vehicle is 21y old so I would hardly describe myself as a car mogul

This is fascinating. I looked at it a couple of years ago (45c/km) but it is still very much an early adopter product when comparing the premium over a regular petrol second car. I’ve been reading that there are options coming that will allow you to also use your EV as a battery pack for your home solar installation which would make it more dual purpose.

As far as the coal issue goes, and the carbon footprint of producing EV’s. I think the idea is to reduce the concentration of pollution in a city and vehicle emissions are a big health issue, just ask the residents of Los Angeles and Delhi.

Many of the cars on SA’s roads are old cars. A car that needs a R200k battery pack replacement after 6-8 years, is worth nothing in this market. Maybe, one day, EVs will be viable, but right now, they’re just not.

The warranty is 8y for 80% capacity. It is fair. For me, 80% warranty (80% of original range) is fine and I am certain an ICE after 8 years is not still 80% as good as new.

But anyway, people will have to buy and own and make informed choices, otherwise they are guessing

Whilst I agree that global warming is not supported by the empirical evidence, it does not mean that EV’s wont come to dominate. In 1910 in the USA cars were 10% and horses 90% of transport. Within 10 years this had inverted. The same is already starting to happen between ICE and EV and by the end of this decade probably 80% plus of all cars manufactured will be electric. Battery costs are declining at such a rate as to make it inevitable.

Battery charging times are already declining to the point where you can get 300 km in 10 minutes and this will continue to decline. Operating costs of an EV are a fraction of that of an ICE vehicle. Total cost of ownership of a Tesla Model Y is already on a par with a Toyota Camry.

Once Tesla has perfected their Full Self Driving (FSD) software this will have a profound impact on the transport industry. Most passenger planes today are flown by computers and the same will come to pass with automotive vehicles and much sooner than most realise.

The traditional automotive manufacturers are living on borrowed time. Most wont be able to adjust to the rapid changes starting to happen. Modern EV’s are computers on wheels and software/hardware will come to dominate.

Anyone interested in being shocked by what is unfolding should look at some of Tony Seba’s presentations on YouTube. He started predicting some of this in 2007 and it is all unfolding even faster than he predicted.

The traditional automotive industry is doomed and the implications for countries like South Africa are going to be profound.

Agree with most of your comments, except:

As with cars, there will be churn. For every ICE manufacturer that exists now, probably twenty started up and disappeared in the early days. The big boys are pivoting, they have to. Our local manufacturers are no different, we will see BM or Merc assemble an EV model here for global market, just like they make the C class here for all markets.

People should uncouple FSD from EV. It is as simple (or difficult) to do FSD in an ICE as EV. The two technologies have nothing to do with each other. FSD (defined any road any time empty) is more than a decade away. Major routes sure, can already happen especially when road systems act like air traffic control.

Batteries are the bottle neck in price and range. Most EV in the luckier places are too expensive and only adopted with enormous per-vehicle subsidies. We have no subsidy – actually have a penalty by way of higher import duty – so here too expensive to take over. When batteries halve their kwh space and weight and cost it is a different game : can compete equal footing no subsidy.

They are attractive to own whether you are a bunny hugger or not. For sure though : diesel is dead, finally. Noisy, stinky, particulate polluters.

Agree with most what you are saying here, except the first sentence, in which you state there is no empirical evidence for global warming. The earth is warming up, especially at the poles. On thus continent,glaciers on the African summits above 5000 m are rapidly declining.
As a whole I think EVs are already a great idea. If I had the funds, I would definitely be looking into switching completely to solar energy at home, and buying an EV. Although as a whole charging infrastructure, import duties are still not very favourable.

Actually both Arctic and Antarctic sea ice is within the 30 year averages and satellite measurements show no change in tropical tropospheric temperatures over the last 40 odd years. Ice gain in the Arctic and Greenland have started weeks earlier than normal this year, which is an indication of lower temperatures. Sea level rises have also been constant at about 1mm per annum for over 100 years.

The mainstream media talk so much rubbish. You need to look at the actual data published.

Acc to NASA: “From about 3,000 years ago to about 100 years ago, sea levels naturally rose and declined slightly, with little change in the overall trend. Over the past 100 years, global temperatures have risen about 1 degree C (1.8 degrees F), with sea level response to that warming totaling about 160 to 210 mm (with about half of that amount occurring since 1993), or about 6 to 8 inches. And the current rate of sea level rise is unprecedented over the past several millennia.”
Roughly 95 mm seawater level rise over the last 28 years comes down to more than 3mm/year.

My question to NASA is just who measured and recorded sea levels with sufficient accuracy 3,000 years ago so that one can say “it rose and declined slightly.” Gunpowder was only invented in 904 AD by the Chinese, so this was long before then. 3,000 years ago one of man’s most important priorities was to ensure that he wasn’t eaten by wild animals. Therefore I doubt measuring the sea levels was even on his mind. (I suppose NASA has some kind of indirect measurement technique like carbon dating which in itself has been questioned often.)

Please shut up. The technology on my iPhone battery is still so inefficient… EV’s will never take off massively as you think… if it were that easy then all car manufacturers would have completely changed by now.

You really think the Saudis will allow this to happen with their oil reserves… dream on

It is interesting to note that in the early part of the last century as part of the evolution of the automotive industry in the USA alone there were literally hundreds upon hundreds of startups. Very few survived. That’s the nature of rapid development and innovation. The mal-investment in China will in fact ultimately speed up the process of change.

Change will happen 9nce oil runs out. How long till oil runs dry??

Maybe this is why Michael Burry shorted Tesla, because he sees the extreme oversupply of EV’s coming to market.

I wonder what the impact would be on the international price of OIL, should all Passenger-vehicles be full electric?

Will it bring the current Brent Crude oil price of around US$76…down to around US$70 or $65 per barrel?

Looking at sector charts, it is established that 65% of global consumption relates to “Transport”. (The rest is various industries & residential)
The “Transport” 65% is broken down between 54% “Road” transport, and 11% (Marine, Rail & aviation).

Taking the 54% “road” transport, about a THIRD of that are “Cars”, while the other third goes to “light trucks”, and lesser portions to military, busses, etc.

(…would be nice flying on electric passenger aircraft. In case the plane gets struck by lightning, it ADDS to the range *lol*)

A major factor behind the take-up of EV is taxes. Both on the purchase (and the US gives negative taxes – rebates) and on fuel.

The ANC has too much vested in petrol (from fuel levy and forecourt employment — voters — to backhanders from suppliers).

The situation with electricity loadshedding is another factor. Hopefully the ANC will stop obstructing private generation, but unreliable electricity supply is currently a disincentive.

The irony is that petrol is our biggest import and if SA could substitute “free” sunshine for it, it could change the course of our economy.

End of comments.





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