China has strongly advised its automakers to ensure that advanced EV technology stays at home and encouraged them to export knock-down kits to foreign factories for final assembly, according to Bloomberg.
China has strongly advised its automakers to ensure that advanced electric vehicle (EV) technology stays at home, Bloomberg said in a report today, citing people familiar with the matter.
The country is encouraging automakers to export so-called knock-down kits, meaning that key components of the cars will be produced domestically and then shipped to destination markets for final assembly, the report said.
Localization efforts through knock-down kits assembly typically include CKD (Completely Knocked Down) and SKD (Semi Knocked Down) models.
Some Chinese automakers have already adopted this strategy in international markets, such as Great Wall Motor, which in January finalized the signing of a vehicle assembly partnership with Malaysian company EP Manufacturing Berhad (EPMB) based on the CKD model.
China's Ministry of Commerce (MOFCOM) held a meeting with more than a dozen automakers in July and told them not to make any auto-related investments in India, Bloomberg said in the report today, citing people familiar with the matter.
In addition, automakers looking to invest in Turkey should first notify the Ministry of Industry and Information Technology, which oversees China's EV sector, and the Chinese embassy in Turkey, according to the report.
MOFCOM's guidelines require that key production should remain within China, which could hurt automakers' globalization efforts as they look for new customers to offset stiff competition and sluggish domestic sales, the report noted.
The MOFCOM noted at the meeting that the countries inviting Chinese automakers to build plants are usually those that are enacting or considering trade barriers to Chinese cars, Bloomberg's report said.
Officials told attendees that manufacturers should not blindly follow trends or believe foreign governments' calls for investment, the report said, citing people familiar with the matter.
Chinese carmakers are stepping up their efforts to build factories overseas as competition in the domestic market gets tougher and additional import tariffs on Chinese EVs are threatened in overseas markets.
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