China's EV sector is poised for 'inevitable' consolidation, says Bain consultant

1 week ago

The electrical conveyance assemblage is seeing its "most breathtaking moment" present — and consolidation successful the assemblage cannot beryllium avoided, says Bain & Company's Helen Liu.

"I would accidental that consolidation is an inevitable inclination successful this industry," Liu, spouse astatine the consultancy firm, told CNBC's "Capital Connection" connected Tuesday. She cited reasons specified arsenic the electrical conveyance sector's superior intensive and tech-heavy nature.

"Historically, we person seen invisible hands similar the marketplace and besides disposable trends, regulations, navigated the manufacture done the consolidation inclination continuously," she said.

On Monday, China's curate for manufacture and accusation technology the state has "too many" EV makers. Those comments sparked fears of further regulatory enactment by Beijing, this clip targeted astatine the autonomous conveyance assemblage pursuing erstwhile moves successful different industries specified arsenic backstage acquisition and technology.

IHS Markit's Huaibin Lin said helium sees a debased accidental of regulatory involution by Beijing successful the short-term. Calls by the manufacture and accusation exertion ministry for consolidation of the car assemblage are not caller and person been happening successful the past 20 years, helium told CNBC's "Squawk Box Asia" connected Tuesday.

"We are successful [an] ever expanding marketplace wherever we person been seeing tremendous maturation for the past 20 years successful car ... sales," said Lin, who is manager of China automotive astatine IHS Markit. He added that the caller vigor vehicles marketplace is presently seeing precise beardown momentum.

"Are we going to spot drastic consolidation wrong manufacture itself? We deliberation there's a large question people implicit it arsenic agelong arsenic the marketplace keeps going," helium said.

In the adjacent 10 years, you're gonna spot a precise fierce contention wrong the caller vigor conveyance industry. Nobody knows who really is going to past successful the end.

Helen Liu

Partner, Bain & Company

Liu from consultancy Bain concurred, saying that maturation momentum and the outlook for the assemblage some look highly affirmative astatine the moment. That's backed by factors specified arsenic supportive policies and astir importantly – lawsuit acceptance.

"Based connected our Bain survey this year, we person recovered that actually, the Chinese customers' acceptance to the EV is starring the planetary benignant of trends and also, we deliberation that's expanding continuously," she said.

China's EV boom

Read much astir electrical vehicles from CNBC Pro

Beyond competing domestically, IHS Markit's Lin said China's electrical car makers are besides expected to contend with accrued superior contention successful the adjacent decade.

Some of this contention could travel from longstanding incumbents successful the car sector, helium said, with accepted interior combustion motor conveyance makers specified arsenic Volkswagen, BMW and Daimler's Mercedes present coming up with "drastic" electrification strategies.

"In the adjacent 10 years, you're gonna spot a precise fierce contention wrong the caller vigor conveyance industry," Lin predicted. "Nobody knows who really is going to past successful the end."