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China orders automakers to avoid investing in India to safeguard EV technology
Industry News- Sep 13,24
The directive comes amid strained relations between China and India, particularly following a deadly border clash in 2020.
Beijing has instructed Chinese automakers to refrain from making auto-related investments in India, while advising them to keep advanced electric vehicle (EV) technology within China. This directive comes as China seeks to safeguard its EV technology and mitigate regulatory risks.
In a July meeting, China’s Ministry of Commerce advised over a dozen automakers to export vehicle components, or “knock-down kits,” rather than establishing new manufacturing facilities abroad. The Ministry also emphasised that any planned investments in Turkey should be reported to both the Ministry of Industry and Information Technology and the local Chinese embassy in Turkey.
This guidance reflects China's strategic push to retain key production processes domestically while its automakers, including BYD and Chery Automobile, establish factories in Europe to circumvent tariffs on Chinese exports. BYD, for example, is planning a $1 billion plant in Turkey and is also expanding operations in Brazil and Spain to meet local component requirements and avoid trade barriers.
The directive comes amid strained relations between China and India, particularly following a deadly border clash in 2020. It also poses a challenge to European countries seeking to attract Chinese carmakers for local economic benefits. While some Chinese automakers have begun setting up plants in Europe, they face scrutiny over whether these facilities meet the necessary rules-of-origin requirements for tariff-free access.
Chinese state-owned SAIC Motor Corp., which has faced scrutiny over financial irregularities related to its Indian operations, has been reducing its stake in MG Motor India, signalling further shifts in its investment strategy.
Despite these developments, Chinese EV stocks experienced declines, with SAIC Motor, Geely Automobile Holdings, and BYD all seeing drops in their respective markets.
(moneycontrol)
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