Clouds are gathering on China’s electric vehicle (EV) front, eroding the allure of the once-attractive proposition for car makers and foreshadowing an industry cull.

China is home to around 500 EV manufacturers battling for a share of the market. But investors are getting cold feet as EV startups struggle with cutthroat competition, shifting regulations, and the need to partner with existing car makers.

Li Xiang, CEO of EV firm CHJ Automotive, warned last month that investors have become more cautious and that a large portion of startups would be forced out of the market. As a result, he said, more than 90% of investors would lose money.

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