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EV Stocks dipped in Monday morning trading.Tesla,Nio,Xpeng Motors and Li Auto fell between 2% and 3%.

China has vowed to consolidate the country’s electric vehicle industry after a decade-long nurturing of the sector led to the emergence of too many players, some of which are barely viable.

“Looking forward, EV companies should grow bigger and stronger. We have too many EV firms on the market right now,” Xiao Yaqing, the minister for industry and information technology, said at a press conference in Beijing on Monday.

“The firms are mostly small and scattered,” he said. “The role of the market should be fully utilized and we encourage merger and restructuring efforts in the EV sector to further increase market concentration.”

Shares of Chinese electric-vehicle makers fell Monday.Xpeng Inc. declined 2.3% in Hong Kong trading, and Li Auto Inc. dropped 1.4%. On mainland exchanges,BYD Co. slid 1.8% and BAIC BluePark New Energy Technology Co. slumped 4.6%.

China, which built its electric-car industry into the world’s biggest, is putting a new focus on consolidating the ranks of EV makers which has ballooned to about 300. The government is drafting measures to rein in overcapacity in the sector and channel resources to a number of key production hubs, Bloomberg News reported last week, citing people familiar with the matter.

Regulators are considering setting a minimum production capacity utilization rate for the industry, and provinces that aren’t meeting it won’t be allowed to approve new projects until surplus capacity comes online, Bloomberg reported.

Tesla is competitive in China, but a consolidated domestic sector could pose a new challenge for the high-profile electric vehicle company.

Tesla announced that it is going to increase the price of its Model Y Performance car in China by $1,552. According to the report announced on the Chinese microblogging website Weibo, the new price of Model Y will be RMB 387,900.