99 per cent of China's EV start-ups will fail, says investor

China's burgeoning pure-electric car industry has a bleak future according to one large investor in the sector, who has predicted that just one per cent of the country's EV start-ups will secure enough funding to survive.

The grim one per cent figure estimated by Ian Zhu, managing partner of NIO Capital, is an improvement on other analysts' predictions that just five per cent of EV makers would be a viable prospect for the future.

Zhu's venture capital fund, which is partly backed by Chinese car-maker NIO, is confident in his prediction after investing heavily in EV start-ups and then watching the bombastic sales pitch to the market fail as reality bites and the fledgling car-maker actually has to begin building cars and selling them to customers.

Zhu told newswire Bloomberg that most of the new breed of EV start-ups frequently underestimate the complexity of building a car from scratch with a large workforce, but they also struggle to understand the huge investment required.

Despite this, China itself has already ploughed in more than $15 billion ($A21b) to fund the research, development and production of new electric cars via huge subsidies and has announced that it will inject another $47 billion ($A65 billion) to help guarantee electric cars will become a viable replacement for traditional internal combustion vehicles.

Currently benefitting from all that cash are an estimated 487 electric car companies.

Of those car-makers, many have become darlings of the Chinese stock market and are valued several times more than a traditional car-maker, despite a complete lack of manufacturing expertise.

This has forced many traditional car-makers to rush to develop their own EVs, if only to sustain their share prices.

Last year, all-electric vehicles accounted for 579,000 sales -- 21 per cent of the world's electrified vehicle sales -- but this number is set to pale into significance as more cities restrict the driving of conventional petrol and diesel-powered vehicles.

Instead of the cash-hungry start-ups, Zhu says his investment group favours joint-ventures between traditional car-makers and pure-electric start-ups. This, says the investor, ensures true innovation is combined with real mass-manufacturing capability.

Without that, most of the new EV start-ups will go from boom to bust as their share prices dwindle and markets begins to realise they're incapable of building vehicles with comparable quality to its established rivals.