Start-UPS of electric vehicles in China broke loose

20 December 2018

Beijing fears to 2020, 20 million electric cars instead of 2 million

Thanks to generous state and municipal subsidies, Beijing has managed to make China the world's largest market of battery electric vehicles (BEV).

However, because the production volume of electric vehicles in the country increases rapidly, and startups for their production are growing throughout the country even faster than mushrooms after the rain, the Chinese government fears that the potential of public investment would be squandered too quickly.

As a result of these concerns, the national Commission for development and reform of the Central economic planning Agency of China, this week has released a radically revised its policy towards investment in the automotive industry.

The new plan, which should enter into force on 10 January, prohibits the construction of new plants in the traditional segment of the automotive industry. However, this is still just not innovation, this Commission ceased to approve individual projects are producing cars that run on fossil fuels, a few years ago.

The main purpose of the revised policy of Beijing is to curb the emergence of new producers BEV by introducing two new sets of constraints.

The first set of rules defines where you will allow new production NEV (electric vehicles, rechargeable hybrids, PHEV and electric vehicles to hydrogen fuel cell FCEV), for the existing large automotive companies and licensed to start-UPS. Regulations require that new industries were implemented in the provinces, where the coefficients of the capacity utilization of local businesses for the production of NEV would have been above the average level in the country over the past two years.

Beijing will be allowed to introduce new facilities for the production of electric cars only leading and independent OEM-manufacturers

Another set of rules intended to raise the threshold of entry for new manufacturers of electric vehicles and to curb speculative investments in this promising sector.

Potential manufacturers of electric vehicles, in addition to the specific volumes of R & d performance and proven production capabilities for the development of the vehicles will also need to have intellectual property rights on key components, including the control system of a vehicle, the electric motors and battery packs.

The primary investors in new projects NEV will also need to own more than one-third financial stake in startups and ensure that they have sufficient funds to Finance the construction and operation of new enterprises.

The rules also prohibit the shareholders of new programs NEV to withdraw investments before projects reach the planned production capacity.

Let me remind you that the production of electric vehicles in China rebounded in the first 11 months of 2018 by 56% to 791 thousand

Over the past few years in China appeared more than 400 startups NEV. It is assumed that without proper control from the top these companies, along with the existing brands, will increase the annual production capacity of electric vehicles in China to 20 million in 2020. This is 10 times the target of government in this period of "only" 2 million electric vehicles per year.

Slow down if a new policy Commission projects NEV in China?

In the long run, the new restrictions could push automakers to produce electric cars solely on the existing plants and remove some of the contenders for a piece of the electric pie. However, in the near future is unlikely: so 16 (!) only Chinese startups NEV, whose production company was licensed by the Commission this year has reached annual capacity of more than 1 million cars a year.

Manufacturers of electric vehicles are rising in China like mushrooms after rain, and is already looking towards the US side

In addition, this year received a green light for the construction of its factories in China two global heavyweights.

Is Tesla Inc., whose plant, being built near Shanghai, to start producing in late 2019. Its full annual capacity is more than 250,000 electric vehicles.

The second heavyweight acts the Volkswagen Group, which began to build a plant for the production of electric vehicles in Shanghai through its joint venture with SAIC Motor Corp. After the start of production in 2020, the plant will annually produce up to 300 000 electric vehicles based on the platform of the VW MEB.

The combination of global brands and new startups, it seems, definitely will continue the current boom NEV in China next year. But the road ahead just will not do without "short circuits" and "blackawton".

The rapid growth of the electric car market in China has generated a lot of speculators in their popularity

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