China may loosen restrictions on foreign investment in NEV industry

Shanghai (Gasgoo)- On Sept. 21st, China’s Ministry of Commerce said it will formulate policy as soon as possible to reduce restrictions on foreign companies’ investment in manufacturing new energy vehicles. The ministry will continually promote the opening up of new energy vehicles’ manufacturing business.

This is an official response to the foreign media’s report that China plans to allow foreign carmakers to set up wholly owned electric-vehicle businesses in its free-trade zones. This policy will be implemented as early as next year and will involve 11 free-trade zones, including Shanghai, Guangdong, Fujian and Zhejiang.

The ministry’s spokesman Gao Feng said China’s new energy vehicle industry has been adhering to the opening up policy. In the Catalogue for the Guidance of Foreign Investment Industries issued in June, the government has loosened the restrictions on the number of foreign carmakers ’electric vehicle joint ventures in China. According to the State Council’s plan, the Ministry of Commerce will work with other departments and introduce new policies to reduce restrictions in foreign companies’ investment in new energy vehicle industry.

Since the beginning of the reform and opening-up policy, the government set the rules that foreign carmakers should establish joint ventures with local brands to run business. If the report is true, that will be a landmark departure.

As the strict dual credits system (CAFC credits and new energy vehicle credits) are about to be released, foreign carmakers has made efforts to meet the standard. Last year, Volkswagen set up a joint plant with Anhui Jianghuai Automobile, followed by Ford with Anhui Zotye and Dongfeng with Renault-Nissan.

It seems good news for Tesla because the electric carmaker has been trying to establish plants in China. As one of the biggest electric vehicle makers in the world, Tesla is also the biggest market share holder among all foreign carmakers in China’s electric vehicle industry.

In 2016, Tesla’s sales in China reached 11,000 units and operating revenue was over 1 billion dollars, which accounted for more than 15 percent of its global operating revenue.

With the production of Model 3, Tesla made an ambitious sales plan, according to which, its global sales should reach 400,000 units in 2018. That is five times of that in 2016. In order to realize its goals, China, the largest new energy vehicle market, is of great importance to the carmaker.