Amid global discussions about overcapacity in China’s new energy industries, recent data suggests that the country’s electric vehicle (EV) sector remains robust and efficient. Overcapacity occurs when an industry produces more goods than the market demands, often measured through capacity utilization rates. Lower utilization indicates potential inefficiencies and excess capacity.
According to the National Bureau of Statistics, China’s industrial capacity utilization rate stood at 75.1 percent in 2023, slightly below the internationally recognized threshold of 80 percent. However, this figure has not alarmed Beijing. Bloomberg reports that the rate is higher than in 2016 and has shown an upward trend in recent quarters.
Economist Fan Lei of Guolian Securities remarked, “Under these circumstances, it is hard to believe that China has a serious structural overcapacity.” The overall lower capacity utilization rate can be attributed to disparities among different sectors.
The EV industry, in particular, showcases high utilization rates compared to traditional low-tech sectors like cement and glass. The Atlantic Council, an American think tank, noted that while producers of internal combustion engine (ICE) vehicles have struggled with utilization rates well below 50 percent due to shifting consumer preferences, EV manufacturers are thriving. Major companies such as BYD, SAIC, and Li Auto report utilization rates exceeding 80 percent.
This contrast highlights the dynamic shift within China’s automotive industry, as consumers increasingly favor electric vehicles over traditional options. The high utilization rates in the EV sector indicate strong demand and efficient production, countering claims of overcapacity.
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Capacity utilization data shows no overcapacity in China's EV sector
cgtn.com
