China will pony up a lot of scratch to help its biggest EV manufacturers compete on the autonomous vehicle front. Just as it did for its EV industry, which dominates the global market for electric vehicles. To be sure, that dominance would not exist if it weren't for the government pumping billions of dollars into it.
Take NIO, for instance. This Chinese EV maker lost $835 million between April and June of 2023. And back in 2020, when the company almost ran out of cash, a state-owned investment fund ponied up $1 billion to acquire 24% of the company. That was then followed by the state-owned China Construction Bank that handed the company a $1.6 billion line of credit.
Today NIO stock trades for around $5.50 a share. A far cry from its high of nearly $62 back in 2021.
This doesn’t mean NIO is done for. In fact, with the government’s help, the company continues to survive.
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To those who play up the narrative of Chinese EV growth, a look at this example of NIO would tell us that cheap EVs have already come with a price, its profits and stock price have decimated, and it is riding on the coat tails of Govt and bank support, without which it could no longer sustain.
Not a healthy picture of the Chinese EV industry. Another bout of sharp lithium price uptick, and they could possibly go bust. Maybe not, but it is still not comforting that the buyers of lithium batteries in the EV space are not exactly in a pink of health.
Guess China has not learnt from propping up its property industry, now doing likewise to the EV space.
