China Is said to weigh relaxing rules for foreign EV makers

A general view of centre Tianjin taken from Tianjin World Financial Center, December 16, 2013. ― Reuters picA general view of centre Tianjin taken from Tianjin World Financial Center, December 16, 2013. ― Reuters picBEIJING, Sept 20 —  is discussing a plan to allow foreign carmakers to set up wholly owned electric-vehicle businesses in its free-trade zones in a major revision of a fundamental principle governing the country’s policy since the 1990s, according to company officials briefed on the matter.

The plan, which is subject to change as a final decision hasn’t been made, could be put in place as early as next year, the people said, asking not to be identified as the deliberations are private. If the policy takes effect, it would be a landmark departure from the existing rules, which require foreign automakers to set up joint ventures with local counterparts.

A relaxation of the rule would give companies like Tesla Inc. the opportunity to set up fully owned manufacturing operations in China, the world’s biggest market for electric vehicles. Ford Motor Co. is exploring setting up a to produce electric vehicles in China with Anhui Zotye Automobile Co. while Volkswagen AG has partnered with Anhui Jianghuai Automobile Group Corp. to make electric cars.

Volkswagen welcomes any liberalisation of markets, in principle, a company spokesman said by phone. No changes are being made to the automaker’s existing joint ventures or agreements in China.

Said Deep, a Ford spokesman, said it was too early to speculate on the potential policy change. Representatives for BMW AG, Daimler AG, General Motors Co. and Tesla declined to comment.

Government shift

China’s Ministry of Commerce, which is responsible for formulating policy governing foreign direct investments, said in an emailed response to Bloomberg News that it will “actively implement the opening up of the new-energy manufacturing sector to foreigners, together with other departments under the direction of the State Council.”

The ministry also referred to a notice issued in August by the State Council, or cabinet, in which it directed government agencies to broaden foreign investor access to areas including new-energy vehicle manufacturing.

Earlier this month, China put the automotive industry on notice by becoming the latest and largest country to seek a phase-out of fossil-fuel powered vehicles, a move sure to accelerate a global shift toward electric car development.

The government is working with regulators on setting a deadline for ending production and sales of internal-combustion vehicles, said Xin Guobin, the vice minister of industry and information technology.

China has been gradually opening up access to foreign auto manufacturers in free-trade zones. Foreign companies were allowed to set up 100 per cent-owned motorcycle and battery manufacturing operations in China beginning in July 2016.

Rule History

The so-called 50-50 rule for Sino-foreign joint ventures was introduced in 1994 to ensure that China’s then-fledgling auto industry could benefit from technology transfer by jointly operating factories with global auto companies such as Volkswagen and GM.

A report released by the US Chamber of Commerce earlier this year laid out some challenges the existing rules create. Joint venture requirements in China “either block opportunities for foreign companies to operate in the market, or, in some cases, create a de facto technology transfer requirement to the Chinese partner as a pre-condition for market access.”

Xu Shaoshi, then-chairman of the National Development and Reform Commission, said in June 2016 that the government was looking into lifting the 50 per cent ownership cap.

The policy has been criticized in recent years for shielding state-owned companies from competition and having to build their own brands. Supporters of the rule say it gives China’s automakers a chance to build enough scale and develop technology capable of withstanding global competition.

Tesla, led by chief executive officer Elon Musk, said in June that it was working with the Shanghai government to explore local production. Shanghai has one of the 11 free-trade zones in China. The others are in provinces including Fujian, Guangdong and Zhejiang.

Even as a rising wave of governments and automakers get behind plug-in electric vehicles, Toyota Motor Corp. President Akio Toyoda said yesterday that hybrid technology will remain central to his company’s strategy.

“With hybrid technology at the center, Toyota will offer fuel-cell vehicles, plug-in hybrids, gasoline cars, and — although we’re a little bit late — electric vehicles,” Toyoda told reporters.

“We’re not thinking about deciding that now it must be EVs, and we’ll only do EVs.”

Battery-powered cars and gas-electric plug-in hybrids may make up more than half of vehicles sold globally by 2040, according to Bloomberg New Energy Finance. — Bloomberg

Source: The Malay Mail Online

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