Favorable joint-venture alternative energy vehicle policy will promote foreign auto companies’ expansion in China

Foreign companies are expected to accelerate the expansion pace on alternative energy vehicles in China this year, when favorable policies are consistently released.

Currently, NDRC and MIIT jointly released Agreement on Improving Auto Investment Projects’ Management, pointing out to guide the traditional oil-fueled auto companies to transform into producing alternative energy vehicle and strengthen the internal impetus in developing alternative energy vehicle industry. It also requires companies should invest in areas with solid industrial infrastructure, substantial innovation systems, strong matching abilities and great development potential, to promote increasing capacity into areas with large consumption demands.

The agreement also moves out obstacles for joint-venture alternative energy vehicle companies. The agreement makes it clear to support companies to conduct international cooperation and encourage companies to fully use international technologies, capital and talents to lift the industrial level for domestic alternative energy auto industry. “Joint-venture BEV companies will not be limited by the number of two, under the new agreement.” One auto analyst said.

According to relevant regulation, any foreign company could establish two joint-venture companies to produce passenger vehicles, commercial vehicles and motorbikes. But foreign companies establish joint-venture companies to produce other auto models will not be limited by the number of two.

In fact, Volkswagen and JAC established a joint-venture company focusing on R&D, production and sales of alternative energy vehicles and parts in September of last year, which has already broken the limit for two joint-venture auto companies under one foreign auto company. Currently, BAIC and Daimler also signed a framework agreement to invest in BAIC BJEV and strengthen the cooperation in alternative energy area. PSA Group also signed agreement with Changan Auto on June 7th, planning for the launch of new models from DS brand since 2018. It can be expected that the number of joint-venture alternative energy auto companies will growing fast with the removal of number limits for joint-venture companies.