Comment This is the Chinese Innovation Ecosystem (Score 5, Insightful) 168
This is how the cycle goes. The central government gives direction on broad technologies and industries it wants to promote. Local and regional government investment funds and private capital flood the market to support dozens if not hundreds of startups not just to make money but to demonstrate commitment to the central government's vision. You create a hyper-cutthroat market (described by one scholar as a massive gladiatorial game) with rapid advancement and tremendous innovation albeit at a cost of substantial waste in terms of capital wasted on unprofitable, excess capacity that the domestic economy can absorb. These firms then flood the global market at cut-rate prices to try and survive but bankrupting all non-Chinese firms on the market in the process, leaving China dominant in the market. In the meanwhile, you get to a point where inevitably, most of those firms go bankrupt or consolidate into a few winners which the government puts into a "gilded cage." These firms are national champions promoted and protected by the central government in exchange for supporting government priorities and initiatives.
We've seen this in multiple markets, from microelectronics to e-VTOL to drones and now EV's. With EV's, China had at one point over 200 brands fighting tooth and nail. In the end, only a few will survive, but they will be much stronger with tremendous scale. That's what we're seeing now is the inevitable culling down to a few national champions like BYD.