This "implosion" is by design in the Chinese model. The PRC's top objective is to quickly catch up, and in an era where capital was cheap, they essentially decided they would risk overcapacity and waste to beat the West. The central government points at a market they want to enter, incentivizing local and regional governments and private capital to aggressively enter those markets. The government essentially hosts a cutthroat (even by Western standards) capitalist "gladiatorial games" to forge a couple of competitive, tested national champions that the national government would then protect and promote overseas. Again, its wasteful, not even China didn't need 300+ EV companies, and the Chinese government is seeking ways to reduce the amount of waste. The national government realizes that there is debt risk for state and local governments with a lot of this waste, and I'm not sure they can keep doing it in the long run. Yet in the end, the priority remains catch up and take over the market, so they will tolerate some level of waste to take over the global EV market. Same playbook we've seen for solar panels, drones, electronic components, bicycle rentals, etc.