China May Allow Foreign Auto Firms To Set Up Wholly Owned EV Subsidiaries

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In a move that would represent a substantial shift in tactics, authorities in China are now reportedly mulling the idea of letting foreign auto manufacturers create wholly owned electric vehicle businesses there.

As it stands, foreign auto manufacturers that want to sell in China are required by authorities there to establish a joint venture with a local Chinese firm in order to do so — which, of course, provides these partnered Chinese firms with an opportunity to increase their auto manufacturing skills fairly rapidly.

This new idea, of establishing free trade zones where foreign firms could sell electric vehicles, represents quite a shift in thinking. And probably says something notable about the growing desperation to reduce the country’s substantial air pollution problems.

Seeking Alpha provides more: “The new rules could allow US automakers Ford, General Motors, and Tesla the chance to set up manufacturing facilities in China without a local partner. Sources say the new policy could be approved for as early as next year.

“The relaxation of the EV restrictions is seen as a win for Chinese automakers as well with the local supply chain likely to explode. BYD is up 12% in Hong Kong, while Geely Automotive and Anhui Zotye are both up around 6%.”

While the Seeking Alpha coverage saw fit to place Ford’s and GM’s names before Tesla’s in that paragraph above, the reality seems to be likely that Tesla would stand to benefit more from a relaxation of the rules than the aforementioned would. At the moment, Tesla accounts for approximately twice as many electric car sales in China as all other foreign automakers combined (but still only ~2% of the Chinese electric car market).

We’ll keep you posted as we find out more about the situation.

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James Ayre

James Ayre's background is predominantly in geopolitics and history, but he has an obsessive interest in pretty much everything. After an early life spent in the Imperial Free City of Dortmund, James followed the river Ruhr to Cofbuokheim, where he attended the University of Astnide. And where he also briefly considered entering the coal mining business. He currently writes for a living, on a broad variety of subjects, ranging from science, to politics, to military history, to renewable energy.

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