China’s Ministry of Commerce reportedly held a meeting in July with more than a dozen automakers, instructing them not to make any auto-related investments in India. According to a Bloomberg report, the move is part of Beijing’s efforts to safeguard the intellectual property and know-how of its electric vehicle (EV) industry, while mitigating regulatory risks as Chinese automakers expand globally.

During the meeting, automakers were directed to prioritise the protection of advanced EV technology by keeping key production processes within China, despite rising overseas demand for EVs. This strategy is aimed at ensuring that core technological developments remain in China.

Additionally, the meeting encouraged Chinese companies to export knock-down kits—vehicle parts manufactured in China and assembled in foreign plants. This approach would allow automakers to bypass tariffs on fully assembled Chinese-made EVs while maintaining control over crucial production elements.

Companies such as BYD Co. and Chery Automobile Co. are continuing with their plans to build factories in countries like Spain, Thailand, and Hungary. However, the focus remains on keeping critical technology within China. The directive from Beijing not only includes India but also applies to other countries such as Turkey. Automakers have been advised to inform China’s Ministry of Industry and Information Technology before making any foreign investments.

These guidelines come as Chinese automakers are trying to globalise their operations, balancing the need to avoid tariffs with the challenges of intense competition and slowing sales in their domestic market. However, the strategy of keeping production within China could potentially slow down their global expansion and pose difficulties for countries like those in Europe, which are eager to attract Chinese investment for economic growth and job creation.

For instance, in Turkey, BYD has plans to build a factory with an annual production capacity of 150,000 cars. Meanwhile, in Spain, Chery Automobile has partnered with a local firm to reopen a former Nissan plant. These projects highlight the broader trend of Chinese automakers seeking to establish a local presence in key international markets.

Image source: Business Today