China‘s pushing its carmakers to keep their advanced electric vehicle (EV) tech at home, even as these companies expand globally. The government’s encouraging automakers to export partially assembled vehicles, or “knock-down kits,” to avoid tariffs and protect their tech. This news, first reported by Bloomberg, comes as Chinese EV makers like BYD and Chery Automobile are setting up factories abroad.

Keeping EV Tech Close

China’s been pretty clear with its carmakers – keep your EV tech at home. Even as companies like BYD and Chery Automobile are expanding into countries like Spain, Thailand, and Hungary, the government wants the key tech to stay in China. This is all about protecting their know-how and managing risks.

India and Turkey Investments

In July, China’s Ministry of Commerce had a meeting with over a dozen automakers. The message was straightforward: steer clear of auto-related investments in India. For Turkey, companies were told to notify both the Ministry of Industry and Information Technology and the Chinese embassy before making any moves.

Global Expansion Hurdles

This directive could make it tougher for Chinese automakers to expand globally. They’re already facing pressure to manufacture locally to avoid tariffs. Plus, European countries hoping to attract Chinese carmakers with job creation promises might be affected too. BYD, for instance, reportedly has plans to build a factory in Turkey with a capacity of 150,000 cars annually, employing up to 5,000 people.

Europe’s Skepticism

European officials are a bit wary of these investments. Valdis Dombrovskis, the European Commission’s executive vice president, warned that EU plants would only benefit from Chinese investment if they meet specific rules-of-origin requirements.

“How much value will actually be created in the EU, and how much know-how will be transferred?” Dombrovskis asked in an interview with the Financial Times.

Brazil and Spain Moves

In Brazil, both BYD and Great Wall Motor Co. are planning to increase the share of locally produced components in their vehicles. This is to meet local content requirements and avoid tariffs. Meanwhile, in Spain, Chery Automobile has partnered with a local firm to reopen a former Nissan plant in Barcelona, assembling vehicles from partially “knocked down” kits.

EVXL’s Take

This move by China highlights the growing importance of EV tech in the global market. It’s not just about selling cars; it’s about protecting and nurturing innovative technology. As seen in our recent articles on Tesla and Lucid, the EV market is fiercely competitive, and every player is safeguarding their tech. This is a strategic play by China to ensure its EV industry remains robust and competitive globally.

What are your thoughts on this strategic move by China? Leave them in the comments section below.