Agencies and staff reporter
Xiaomi (1810) plans to set up production lines in Beijing and Wuhan, as Chinese authorities said the electric vehicle industry needs to consolidate.
Xiaomi plans to acquire the Borgward plant in Beijing, as well as build its own plant in Wuhan for stable production capacity, reported mainland media.
News of that came as Minister of Industry and Information Technology Xiao Yaqing said yesterday that China has "too many" EV makers and the government will encourage consolidation.
"Looking forward, EV companies should grow bigger and stronger. We have too many EV firms on the market right now," Xiao said.
He also said China would improve its charging network and develop EV sales in rural areas.
Shares of Chinese EV makers fell yesterday. Xpeng (9868) declined 2.3 percent in Hong Kong trading, and Li Auto dropped 1.4 percent. On mainland exchanges, BYD slid 1.8 percent and BAIC BluePark New Energy Technology slumped 4.6 percent.
The focus on moving the EV industry to a more sustainable footing comes as China shakes up industries from tutoring to big tech in President Xi Jinping's quest to remodel the nation's economy.
The rapid growth of China's EV market has been spurred by subsidies encouraging consumers to switch. Total subsidies for new-energy vehicle purchases stood at 33 billion yuan (HK$39.76 billion) in the five years through 2020, ministry data showed.
Provincial authorities have offered tax breaks and other incentives for EV manufacturers to set up shop, leading to overcapacity. Jiangsu, for example, is now home to around 30 automakers, several of them bankrupt.
The average production capacity utilization rate for automakers in China overall was about 53 percent last year, according to calculations based on a Jiangsu province submission to the National Development and Reform Commission.