Tomorrow Investor

China to Put EV Industry Expansion on Hold


Recent criticism from Western governments regarding policies governing the Chinese electric vehicle (EV) industry which led to a recent boom in EV exports, along with a significant decrease in global EV demand, has led to an announcement wherein China is set to put most plans for sectoral expansion on hold.

In an announcement made on Friday, January 19th, Chinese Deputy Minister for industry and information technology Xin Guobin declared that the government is taking severe measures to deal with what he referred to as a lack of foresight on local companies and authorities regarding the development of new EV initiatives. At the same time, the government is also set to crack down on inappropriate or unethical competitive behavior among those in the industry.

Xin openly criticized protectionist behavior on the part of foreign governments, going so far as to accuse these of abuse of trade dispute resolution policies. His sentiments mirror those of the national government regarding the United States’ recent restrictions on vehicles and batteries made in China.

Dealing with a Perceived Threat

Last September, the European Commission began investigating the Chinese EV sector, prompting speculation that many European automakers see their counterparts as a threat, as the former produces EVs that are both cheaper and more technologically advanced. As a result, there has been a trade war between Chinese EV manufacturers and their competitors in France, Germany, and Italy.

The European investigation was the result of complaints on the part of regional industry professionals that the expansion of Chinese EVs into the world in terms of sales and production was driven by massive government subsidies and loans. 

European manufacturers also expressed concerns that EV production facilities in China have far exceeded in-country demand and are set to push out their competitors overseas. This is reminiscent of what Chinese manufacturers have done to cut out the competition in the fields of metals and solar panels.

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