While manufacturing plug-in electrified vehicles has become a hot business angle for Chinese-backed startups, about 90 percent of them may soon be out of the business.

Inspired by generous government subsidies for “new-energy vehicles,” more than 200 startup companies backed by Chinese billionaires and other investors have entered the market. About 95 percent of these companies developing PEV platforms will see a shakeout as the government imposes stricter technology standards, according a report in The Economic Daily.

The government is considering issuing only 10 permits to vehicle makers, Dong Yang, executive vice chairman of China Association of Automobile Manufacturers, told Bloomberg.

The Ministry of Industry and Information Technology (MIIT) may restrict the number to 10. That won’t include traditional carmakers developing PEVs such as SAIC Motor Corp. and BYD Co., Yang said.

“It’s true we’re emphasizing support to develop new-energy vehicles, but should we allow everyone to go ahead?” said Yang.

Of the 10 companies eligible for the government permits, two awards have been granted and three companies are being given serious consideration, according to Bloomberg.

Beijing Electric Vehicle Co. is one of the two granted permission; that company is controlled by BAIC Group, the state-owned manufacturer for Hyundai and Mercedes-Benz. Beijing Electric Vehicle Co. will build a factory in Beijing capable of making 70,000 PEVs a year.

The other approved PEV maker is Hangzhou Changjiang Passenger Vehicle Co., a former state-owned bus maker. That company was salvaged by an investment from Hong Kong-traded FDG Electric Vehicles Ltd.

Companies intending to apply for permits include Wanxiang Group Corp., owner of Karma Automotive and A123 Systems. Wanxiang will be building a $375 million factory in Hangzhou.

LeEco is the second company up for consideration. The Chinese company will be investing 6 billion yuan (about $898 million) in a factory capable of producing 200,000 cars a year, the company announced on August 10.

The third startup company is WM Motor, which announced earlier this month that it had raised $1 billion with plans to launch its first PEV model in 2018. That company was started by Freeman Shen, a former executive at Volvo Cars owner Zhejiang Geely Holding Group Co.

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In a draft policy document recently posted for public feedback this month, the ministry listed 17 technologies that companies intending to build and sell electric cars must have in place for “healthy” development of the industry. These include a control system for gauging performance and stability of the car, an information system tracking car parts, and process for recycling or reusing PEV batteries.

Another pressure point on startups will be phasing out of a subsidy program after 2020. That will remove an incentive for startups depending on these incentives to gain profitability. For now, being granted a permit is a barrier that must be crossed for their survival.

“The speed at which they’re granting permission is worrying,” said Zhang Zhiyong, a Beijing-based independent auto analyst. “Many companies are constructing their manufacturing facilities, but they’re blocked at the door from getting the licenses. This is a huge problem.”