China to loosen electric-car rules for foreign makers, because they didn't work

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2014 Tesla Model S in China

2014 Tesla Model S in China

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It has long been official Chinese government industrial policy to dominate the world's production of lithium-ion battery cells and to establish a commanding electric-car industry.

This would not only position the country in crucial industries of the future but give it a way to start attacking the choking smog in its cities that affects public health.

While more electric vehicles were sold in China than any other market last year, most of those vehicles remain far from competitive in the rest of the world.

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Recognizing that its native automakers could not succeed in selling cars in Europe and North America, the country has proposed to relax joint-venture rules for so-called New Energy Vehicles.

Any non-Chinese maker wishing to build cars in the country is presently required to establish a joint venture with an existing Chinese carmaker.

The goal is for the local company to learn from the foreign maker, strengthening its future ability to compete.

Kandi electric car (Image: Kandi Technologies Group)

Kandi electric car (Image: Kandi Technologies Group)

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Now, China proposes to relax those rules for plug-in electric cars, to get more world-class cars on the road faster.

As noted by Electrek, "The National Development and Reform Commission and the Ministry of Commerce released the new policy last week, and it is seeking public comment until next month."

With the impact of public comments uncertain at best in China, the revised regulations could go into effect sometime this year.

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But there's more background to the story. We reached out to longtime China hand Michael Dunne of consultancy firm Dunne Automotive for some context.

"In 2010, China set out specific plans to be number one globally in electric vehicles," Dunne wrote. "Officials in Beijing set specific production targets: 500,000 annually by 2015, and 2 million a year by 2020."

China hopes to kill three birds with one stone in its goal of leading global electric-car production, he said.

First, it reduces its dependence on foreign oil and the need to engage in the fraught politics of the Middle East and Russia.

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