Guangdong to encourage foreign firms to invest in NEV businesses

Shanghai (Gasgoo)- Guangdong provincial government stated earlier this month that it will encourage foreign investors to plow capital into new energy vehicle (NEV) businesses and relax foreign ownership restrictions on commercial vehicle (CV) manufacturers, as part of efforts to open wider to the world.

(Xpeng G3, photo source: Xpeng Motors)

Besides, the foreign parent of a Sino-foreign PV joint venture will be supported in transferring its average fuel consumption and NEV credits as required, according to the document Guangdong Government issued on July 25.

The local policy issuance came after China's state planner said on June 24 it will remove foreign ownership caps for companies making commercial vehicles (CVs) from July 23, 2020, which might have a significant effect on the reform of China's CV industry.

According to the 2020 version of two negative lists issued by China's National Development and Reform Commission (NDRC) and Ministry of Commerce (MOFCOM), the equity stake held by Chinese parent company in a complete vehicle manufacturing joint venture should be not less than 50%, and a foreign investor is allowed to build up to two joint ventures that produce same automobile products. However, the makers of special vehicles, new energy vehicles (NEVs) and CVs are ruled out.

In April 2018, the NDRC announced in a statement that China will scrap foreign ownership limits on new energy vehicle manufacturers in 2018, followed by commercial vehicle makers in 2020 and passenger vehicle companies in 2022.

In principle, this means that foreign investors will be permitted to own more than 50% of equity stake in a joint venture or even form a wholly-owned subsidiary in China to produce CVs from 2020 and PVs from 2022 respectively.

(Photo source: Hyundai Truck & Bus (China) Co., Ltd.)

The updated Market Access Negative List reassures the removal of the restrictions for NEV and CV makers. Hyundai took the first step in CV area. The South Korean automaker has obtained 100% stake in Sichuan Hyundai Motor Co., Ltd.， which is currently named Hyundai Truck & Bus (China) Co., Ltd.), making the latter the firstCV manufacturer in China that is wholly owned by a foreigner company.

In January 2019, the EV manufacturer Tesla started the construction of the Gigafactory 3 in Shanghai, which is China's first vehicle manufacturing plant entirely possessed by a foreign firm.