China discourages local automakers from building EV plants overseas

China’s Ministry of Commerce discouraged Chinese automakers from investing overseas. 

In July, the Ministry of Commerce told Chinese automakers not to invest in India and “strongly advised” against investments in Russia and Turkey. It also mentioned risks in building car manufacturing factories in Europe and Thailand. 

According to Reuter’s sources, China’s Ministry of Commerce advised Chinese automakers to use overseas factories as final vehicle assembly facilities and export knock-down components from China.

Earlier this year, India introduced an EV-friendly policy for foreign automakers interested in manufacturing locally. The policy attracted big names in the global auto industry, including Tesla and Hyundai. 

Tesla was expected to invest $3 billion in a manufacturing plant in India, but the company has yet to make any moves since Elon Musk canceled his meeting with Prime Minister Narendra Modi.  Meanwhile, Hyundai filed for an IPO in India, which is expected to raise $3 billion—the country’s largest initial public offering. 

So far, Chinese automaker Leapmotor and its partner Stellantis have considered selling electric vehicles in India. Most automakers in China are focused on expanding in Europe. 

Leapmotor and BYD are the two Chinese automakers that have taken significant steps in the European auto market. BYD has established good relationships with dealership networks and invested in European dealers. 

Leapmotor might be a step ahead of its Chinese competitors though. It has already started production in Poland at a Stellantis plant. Other Chinese automakers, like Geely, are thinking of building manufacturing plants in Europe as well to avoid the European Commission’s tariffs on China-made EV imports.

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