(Yicai Global) May 22 - Emerging Chinese electric car star-ups are still faced up with challenges including lack of finance, failing to achieve economy-scales and building a research and development system from the ground up.
Charlie Jiang, Industry X.0 Lead for Accenture Greater China made such remarks after observing many start-ups including Nio, Xpeng, Chehejia, WM Motor, AIWays loomed on the Auto Shanghai 2019 held during April 16 to 25.
Newcomers' greatest challenge lies in securing funding sustainably since the return on investment often takes a particularly long time. It is also difficult for them to make profit before selling large quantities to amortize the fixed costs and reduce unit cost. Start-ups will find building a research and development system is more time-consuming and complicated.
However, newcomers also have some advantages and opportunities. The transition from combustion engine vehicles to electric vehicles paves ways for these start-ups to enter the automotive market whose barriers get lowered since the electric power-train is easier than engines and gearboxes.
Besides, Internet companies have technological and cultural advantages to participate especially in new business models like car sharing, car connection. China's encouragement for electrification and foreign brands' absence in early electric car development stages also offer them opportunities.