[News] China Urges EV Manufacturers to Keep Key Technologies from Leaving the Country

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According to a Bloomberg report on September 12, the Chinese government is encouraging local carmakers to export knock-down kits to their overseas factories, where key car components are produced in China and then shipped to the destination markets for final assembly. This strategy aims to avoid punitive tariffs on Chinese cars, while ensuring that advanced EV technologies remain within China.

In recent months, Chinese electric vehicles have faced tariff barriers in Europe and the U.S. On May 14, the White House announced an increase in tariffs on Chinese EV imports to 100%. The European Union imposed additional tariffs on pure electric vehicles from China starting July 4. On August 26, per a report from Reuters, Canada also announced a 100% tariff on Chinese electric vehicles.

To avoid these tariffs, Chinese car manufacturers are setting up production facilities abroad. For instance, BYD signed a USD 1 billion investment agreement with the Turkish government on July 8 to build a factory in Turkey with an annual production capacity of 150,000 electric vehicles, expected to start operations by the end of 2026.

Reportedly, it’s hinted that the new factory may facilitate BYD’s entry into the European market, given Turkey’s customs union agreement with the EU. Turkey also imposed a 40% tariff on Chinese cars in June. Regarding this matter, BYD declined to comment.

The report from Bloomberg also claims that, in July, China’s Ministry of Commerce held a meeting with several car manufacturers.

During this meeting, the Ministry suggested keeping key EV technologies within China and instructed that car manufacturers should avoid making any automotive-related investments in India.

Additionally, companies planning to invest in Turkey were advised to notify both the Ministry of Industry and Information Technology, which oversees China’s EV industry, and the Chinese embassy in Turkey.

The Ministry of Commerce indicated that countries inviting Chinese car manufacturers to set up factories are typically those considering or implementing trade barriers against Chinese vehicles. Officials reportedly advised attendees not to blindly follow trends or trust investment offers from foreign governments.

The Ministry’s guidance to keep critical production within China may hinder the global expansion efforts of these manufacturers, who are seeking new customers to offset intense competition and sluggish domestic sales, factors that are impacting their profitability.

This measure could also affect European countries that have been courting Chinese manufacturers, hoping to attract job opportunities and boost their local economies.

Read more

• [News] EU Plans to Cut Tariffs on China-Made Tesla EVs from 20% to 9%, with Final Decision Expected in October
• [News] Punitive Tariffs on Chinese EVs by US Reportedly to Further Hinder BYD, Leapmotor and Others’ Global Expansion Plan, while EU Investigation Persists

(Photo credit: BYD)