China’s EV startups once seemed unstoppable. The coronavirus pandemic leaves many under pressure.
With lucrative state subsidies set to end soon and private capital drying up, hard-pressed startups are now chasing funding to keep afloat.
It has been a sharp reversal of fortunes for Chinese EV companies. Flush with subsidies and private capital, the startups had once looked unstoppable. By early 2019, the country had 635 of them, according to the government-backed NEV State Monitoring Center, some promising to reinvent the automobile just as Apple Inc. transformed the cellphone.
While local startups have struggled to make an impression, Tesla Inc. and several established auto makers, notably BYD Co., have been ramping up their EV sales, suggesting the startups may have missed their chance. NIO has cut costs and slashed head count. It has a 5,000-order backlog and should start delivering positive margins in the second quarter, the company said in response to questions.
Local governments in China have a history of making risky bets on EV companies, seeing them as a means to modernize fusty local car makers and support the economy through jobs and taxes, “even if it means financial losses,” said Mr. Dunne.The company has already burned through roughly $300 million developing EVs at research-and-development centers in Nanjing and Oak Park, Mich.
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