(Bloomberg) -- A senior Chinese government official chided local authorities for launching an excessive number of new energy vehicle investment projects, and said more needs to be done to boost domestic demand for NEVs amid rising cross-border protectionism.

Electric vehicles have emerged as an industrial success for China in recent years, with domestic sales and exports both soaring. But rapid output growth has led to profitability concerns for Chinese companies, and trade tensions with Europe.

“Some regions and companies are still blindly launching and duplicating new energy vehicle projects. This requires great attention and effective measures to solve,” Xin Guobin, a vice minister at China’s Ministry of Industry and Information Technology said at a ministerial briefing on Friday.

Xin also cautioned that “we are facing unfavorable factors such as insufficient consumer demand, and some countries and regions have misused trade-remedy measures and protectionist actions,” according to a transcript on a government website.

Domestic sales of NEVs increased 38% year-on-year to reach 9.5 million in 2023, Xin said, while exports rose to 1.2 million, an increase of more than 77% from the previous year.

Profitability Worry

“Many new energy vehicle companies, especially those focused on the domestic market, have still not achieved profitability,” Xin added, referring to “disorderly competition” in the domestic market.

Measures such as car-tax purchase exemptions are needed to boost NEV consumption, he said.

Shipments of Chinese-made battery-electric and plug-in hybrid vehicles to dealers are projected to increase 25% to 11 million units this year, according to the China Passenger Car Association. 

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