China's electric-vehicle sector, which roughly has 200 companies, is on the brink of massive a shake-up as the government seeks to limit the number to only 10 by implementing stringent standards. According to a government-backed news outlet, the government may weed out as much as 90 percent of the electric vehicle startups currently operating.

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Currently, only two companies, BAIC Group's Beijing Electric Vehicle Co. and Hangzhou Changjiang Passenger Vehicle Co., have gained approval to manufacture electric cars, Bloomberg reported citing the documents from the National Development and Reform Commission. Three other firms, namely, Karma Automotive's Wanxiang Group Corp., Jia's LeEco, and WM Motor, are reportedly planning to apply for permits.

"There are too many entrants in the sector, and some of them are just speculators," Yin Chengliang, a professor from Shanghai Jiao Tong University's Institute of Automotive Engineering, said. "The government has to raise the threshold. It's bad to see irrational investments in projects with low technology levels."

The country's Ministry of Industry and Information Technology issued a draft policy document for public comment this month. The draft listed 17 required technologies every electric vehicle startups must have to ensure a positive development in the sector, according to Gas2. The list includes a control system that identities NEV's performance and stability; information system that detects the sources and the condition of key parts; and a process for recycling or reusing batteries.

The state-backed Economic Daily said that with the new policy, an estimated 90 percent of the companies that are currently operating in the electric vehicle market, would still not be able to meet such standards in two years.

However, the new rule is not applicable to traditional full-line car makers such as BYD Co. and SAIC Motor Corp., CNET reported.

TagsElectric Vehicles, Electric cars, Driverless Cars, SAIC Motor Corp, Baidu