China Wants Automakers To Safeguard Their EV Technology And Keep It Within The Country As Companies Look To Expand Factories To Avoid Heavy Tariffs: Report

China has reportedly advised its automakers to ensure that advanced electric vehicle (EV) technology stays within the country even as they put up factories in foreign countries.

What Happened: China is recommending that Chinese automakers export knock-down kits that can be assembled at their foreign plant, reported Bloomberg, citing people familiar with the matter. This would ensure that key parts of the vehicle will continue to be produced in China.

China’s Ministry of Commerce also instructed automakers not to make any auto-related investment in its neighboring country India in a meeting in July, the report said.

Why It Matters: Chinese automakers, including EV giant BYD Co. BYDDY, are looking to expand manufacturing to foreign countries in a bid to avoid heavy tariffs imposed on vehicles made in China by the U.S., Canada, and Europe. Chinese carmaker Chery is eyeing a factory in Spain and BYD is planning a factory in Hungary.

Chinese automakers are also looking at foreign markets to increase sales given the heightened competition and price war in their home country which is weighing heavily upon their profit margins. Their EVs have an advantage in foreign markets over domestic players owing to their lower price point.

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Photo courtesy: BYD