The Electric-Vehicle Bubble Starts to Deflate – by Editorial Board (Wall Street Journal – August 21, 2023)

Biden is imitating China just as its industrial policy starts to crack.

It’s ironic, to say the least, that the U.S. is seeking to imitate China’s economic model at the moment that its industrial policy fractures. Look no further than its collapsing electric-vehicle bubble, which is a lesson in how industries built by government often also fail because of government.

Tesla last week slashed its prices in China to boost sales in an oversaturated EV market. In July Tesla and other auto makers in China agreed to stop their EV price war, only to scrap the cease-fire days later owing to government antitrust concerns. While lower prices may benefit consumers, auto makers in China are bleeding red ink and going bust.

A plethora of Chinese EV start-ups launched in the past decade, fueled by government support, including consumer incentives and direct financing. Auto makers churned out EVs to suck up subsidies. Giant property developer Evergrande Group launched an EV unit as its real-estate empire began to implode, but now the EV unit is foundering too.

About 400 Chinese electric-car makers have failed in the past several years as Beijing reduced industry subsidies while ramping up production mandates.

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