This coming from a man who works in a company that’s partly backed by a Chinese EV startup

China may be ground zero for hundreds of startup EV automakers, but that doesn’t mean success is on the horizon for a lot of these companies. That’s the sentiment shared by NIO Capital Managing Partner Ian Zhu, who told Bloomberg that 99 percent of all Chinese startup electric car makers will fail to get off the ground because of a lack of significant investment in the technology.

Investor Says That Only 1 Percent of China's EV Startups Will Survive Exterior
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It’s a very complicated system that needs abundant investments and a large group of people to be able to build a car from scratch

NIO Capital Managing Partner Ian Zhu makes sense, even though it must be noted that he runs a venture capital fund that’s partly backed by NIO, a Chinese EV company that has the record-setting Nio EP9 in the fold. The EP9, for those who are unaware, set the lap record for an electric car at the Nurburgring when it posted a lap time of 7:05.12 back in November 2016.

While it is strange for Zhu to dismiss the potential of startup electric car makers in China, he does make a point as far as his reasons are concerned. “It’s a very complicated system that needs abundant investments and a large group of people to be able to build a car from scratch,” Zhu said in an interview with Bloomberg. “Therefore, the survival rate of all these EV startups will be very low.”

Zhu’s concerns stem from the number of technological investments a lot of these companies have to make to get their projects off the ground. These tech investments need money — lots of it — and finding that money is going to be much more difficult now that there are more companies who are looking to do the same things.

Put these elements together and sprinkle in the rising competition among these companies and it’s easy to see Zhu’s point. We’ve even seen signs of what Zhu is talking about with other Chinese EV startups, particularly those who made huge promises in the beginning, only to falter when money started becoming tight. Remember Faraday Future? The Chinese EV ecosystem is becoming more and more competitive as more brands start jockeying for position at the dinner table. There just aren’t enough seats and enough meals to go around for all of them.

Investor Says That Only 1 Percent of China's EV Startups Will Survive Exterior Computer Renderings and Photoshop
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We’re probably going to see more firms be born as long as China remains true to its goal of becoming the world leader in producing electric cars

Still, the cloud that hangs over all of these companies hasn’t stymied attempts by these companies to exceed expectations. In fact, we’re probably going to see more firms be born as long as China remains true to its goal of becoming the world leader in producing electric cars. Billions of dollars have been poured into startup companies, a lot of whom see Tesla as an example of what the possibilities are if they play their cards right. Companies like Xpeng Motors and NIO, which is backed by tech giant Tencent Holdings Ltd., have done right by their goals. Even Geely-owned Lynk & Co. is on the right track to become successful in its field.

As pessimistic as Zhu paints the future of most Chinese EV startups to be, there remains a palpable sense of enthusiasm among these companies. It’s not going to be easy for them to get to where they want to, especially if they don’t have the funding in place, but for as long as China remains steadfast in its goal of being the world leader in electric car production, there should at least be optimism that more of these startups will succeed than fail. There will be casualties, sure, but for the sake of the future, here’s to hoping that these casualties won’t make up 99 percent of all those who tried.

Further reading

Investor Says That Only 1 Percent of China's EV Startups Will Survive Exterior
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Read our full review on the 2019 Nio EP9.

2018 Faraday Future FF 91 Exterior Computer Renderings and Photoshop
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Read our full review on the 2018 Faraday Future FF 91.

Source: Bloomberg

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