The Chinese government has promised to support the expansion of domestic carmakers into international markets amid a flurry of trade sanctions against electric vehicles from China. The country’s Ministry of Commerce recently posted a document outlining 18 guidelines for China’s central bank and several departments to boost new energy vehicle trade (NEV).
China’s commerce ministry will partner with nine local departments and institutions to undertake activities such as easing Chinese export processes, boosting yuan settlements overseas and encouraging domestic carmakers to build auto R&D centers in foreign nations. The guidelines also push for Chinese carmakers to work with foreign researchers to figure out efficient means of using “global innovation resources.” China’s Ministry of Commerce is calling for local NEV makers to partner with overseas companies to bolster their overseas supply chains for both electric vehicles and electric vehicle batteries.
Additionally, the ministry instructed customs and transport departments to limit processing times to improve logistics, boost transportation safety and help EV makers grow their shipping fleets. The new guidelines also called on the government to boost credit mechanisms for new energy vehicle companies through higher export credit insurance issuances and easing cross-border yuan settlements.
Most of the guidelines outlined in the document dealt with the increasing risk of trade restrictions against Chinese-made electric cars in foreign markets. Several Chinese companies have already expanded outside the nation’s borders and have attracted plenty of consumer attention due to their low-cost offerings. However, regulators in foreign markets have turned their eyes to cheap EV exports from China. Last year, European Union leaders launched a probe into the cheap Chinese cars streaming into the EU market and claimed that the Chinese government may be using millions of dollars in subsidies to artificially lower EV prices.
Europe is the second largest EV market on the globe after China, and the continent is a large market for electric cars made in China. With massive government subsidies lowering their production costs, Chinese EV makers can price their EVs at significantly lower points. This has resulted in cheap EVs from China flooding into the EU market. EU lawmakers say these “artificially cheap” electric cars threaten to price European carmakers such as Volkswagen out of the market.
The United States is also looking to increase tariffs on Chinese electric cars and other products amid an escalating trade war between the two nations. U.S. Commerce Secretary Gina Raimondo recently said electric cars from China are a national security threat.
With China determined to bring the competition to international actors such as ElectraMeccanica Vehicles Corp. Ltd. (NASDAQ: SOLO), only the companies with EVs that are reliable, affordable and appeal to customers will survive.
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