WM Motor's EX5 electric vehicle on display at the Consumer Electronics Show Asia in Shanghai in June 2019. Arjun Kharpal | CNBC

If you walk around Shenzhen, one of China's big technology hubs, you'll notice all of the taxis are electric. In other major Chinese cities, so-called new energy vehicles are commonplace — with Tesla cars and other models from the dozens of domestic manufacturers on the roads. China is after all the world's largest electric car market by volume. It got there with the help of heavy government support in the form of subsidies to auto firms. But Beijing is starting to wind down the support, hitting investor sentiment and prompting experts to warn of failures among the dozens of electric car start-ups. Subsidies are slated to be cut by about half next week on June 26. The cuts range between roughly 45% and 60%, and have been completely scrapped for vehicles with ranges below 250 kilometers per charge. That will lead to consolidation in China's electric car market, analysts say. "It's always fragmentation before concentration ... there will be companies that don't make it. The weaker ones will be rooted out pretty quickly," Bill Russo, CEO of Automobility Limited, told CNBC.

Low-end players to take hit

Some of China's electric automakers that are now beginning to deliver their first cars, are confident they can survive and feel lower end players could get hit. "In general, I would say that, apart from a short-term blip, I think it's actually good for the industry because traditionally ... the companies that really take advantage of the subsidies are low-end manufacturers not focused on making the product — they are focused on collecting subsidy from the government," Brian Gu, President of Xpeng Motors, told CNBC in an interview last week.

The CEO of WM Motor, Freeman Shen, echoed the same sentiments, saying his company could get a boost as consumers look higher up the value chain. "The consumers who (are) looking at the low-end market products will have to go up and look at the products like WM Motors," Shen told CNBC in an interview last week.

'War of attrition'

"I think the general macro environment in sort of trade as well as in EV (electric vehicles) sector in general, the public company trading performance ... has not been stellar. That has a ... (dampening) effect, I think, on investment sentiment," Xpeng's Gu said. "But I think the investors tend to still be drawn to, I would say, top companies in the sector. So I think it will create probably more trouble for the followers, people who does not have a product in the coming month(s) or years," he added. Automobility's Russo said that costs incurred by electric auto companies will rise given that they will continue to release new models, increase production, open showrooms and build infrastructure. That could lead to the race between these automakers being all about stamina. "Will there be consolidation? Yes, because the cost of not only building a product, but having to support the infrastructure to present their product to the market, is pretty high," Russo said. "And how deep are the pockets of investors? Are they willing to sustain loses for a long period of time? In some cases, the answer is yes. They see the long term potential for this market becoming exponential," he said. "But to get there, you have to survive a number of years of losing money. It's going to be a war of attrition for some of the companies in this space."