Li Auto Inc.’s LI chief executive officer, Li Xiang, has reportedly urged the government to increase mergers and acquisitions among struggling EV manufacturers, cautioning about potential social losses from failed companies.
The CEO emphasized the need for China to establish a consolidation mechanism within the automotive industry, Bloomberg reported, citing a social media post on Wednesday.
“In the future, many new brands will encounter operational and financial problems as a result of competition,” Li posted on China’s Weibo social media, which Bloomberg noted. “If social loss caused by mergers and acquisition is 10, that by bankruptcies is 100.”
Li cited the example of the U.S.’ Big Three auto giants, born from intense competition and mergers among numerous car companies, urging the Chinese government to steer domestic automakers towards consolidation, the Bloomberg report read.
China’s new-energy vehicle (NEV) sales began slowly this year due to subdued consumer sentiment and property market issues, the report added.
January shipments to dealers declined 37% to 700,000 units compared to December, as per preliminary data from China’s Passenger Car Association, which is seen by Bloomberg.
Intense competition in the largest EV market has eliminated smaller players.
China’s EV industry, once supported by subsidies, had about 100 makers last year, down from around 500 in 2019, the report added.
Price Action: LI shares are trading higher by 3.44% to $32.92 on the last check Wednesday.
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