China Plans To Halt EV Production Permits – Future Of NIO, LeEco, Others In Jeopardy

3 months ago by Mark Kane 11

NIO ES8 EV SUV

NIO ES8 EV SUV

While in a normal situation, every government would be more than happy to have an increased number of local plug-in vehicle manufacturers setting up shop.  However, China is concerned by the sheer glut of manufacturers, and the number of recent new applications in front of them.

LeEco LeSEE

According to a report by Bloomberg, the National Development and Reform Commission is said to be planning to halt issuing new permits to produce New Enegy Vehicles (plug-in vehicles) as there are so many out there right now, it fears a bubble is being created.

NIO and LeEco were both specifically mentioned by Bloomberg as those, which might be hurt by lack of permission, or a delay in getting one.

“The National Development and Reform Commission, which oversees new investments in the auto industry, wants to evaluate the program after handing out 15 production licenses since March 2016, said the people, who asked not to be identified because the discussions aren’t public. A suspension of new permits may delay plans by companies such as Internet entrepreneur William Li’s NIO and Jia Yueting-backed LeEco’s electric-car unit that have said they intend to apply.”

Halt of new permissions is good news of course for existing, approved manufacturers like BYD or BAIC.

Of note, the last EV production permit handed out by the NDRC was to Volkswagen (a joint JV with Anhui Jianghuai), after China recently came to an agreement with German automakers to give them a little more time to hit high EV production goals in the country.

Oh, to have this problem in Europe or the United States.

source: Bloomberg

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11 responses to "China Plans To Halt EV Production Permits – Future Of NIO, LeEco, Others In Jeopardy"

  1. unlucky says:

    Interesting. I guess these companies could still produce outside China.

    1. SparkEV says:

      It probably not just the permits, but permits tied to subsidies. Chinese gov’t probably didn’t want to deal with so many companies trying to get subsidies.

      1. unlucky says:

        I dunno if it’s direct or not. But in China when companies like this they invariably start by getting money from the local governments. The local party members and the businessmen scratch each other’s backs and get these companies started, then the government funnels local purchases into the company because you do want what you just invested in to grow, don’t you? So in that way government money ends up funding many, many of these companies.

        That’s how this mess got started in the first place. The government pushed back and forced some consolidation of electric car companies already. This seems like an additional effort in that direction.

        They think that having fewer companies will ensure those companies are stronger and help them develop. Get more wood being one arrow so to speak.

  2. terminaltrip421 says:

    after the earlier fraud fiasco keeping a keener eye on things is smart.

  3. Jake Brake says:

    FF and LeEco are both going belly up on their own. NIO is cranking away with a good product, factory already built and it would be a shame to slow them down.

    1. unlucky says:

      NIO hasn’t built anything yet. The EP9 is built entirely by a UK company. It’s not quite a product yet either, as they haven’t sold any. But they are going to get 10 built to sell.

      I didn’t know they have a factory. They certainly have a substantial R&D operation in California though.

  4. Nada says:

    Bejeing reportedly does not like LeEcos CEO owner could that be partly why they didnt get a license??
    I beleive NIO has already signed a contract to have an established manufacture build their cars for them…
    Mercedes also bought into Bejeing EV company from BAIC to make cheap EVs without mudding up their brand…
    Apparently Mercedes has little faith in their joint venture with BYD to build EVs under the Denza brand…

    And comicaly who has more capatilisits willing to take risks and do the work…
    US or China??

    All in all it is probably good to limit the licenses as some will surley fail and others can buy the licenses or companies…

  5. Pushmi-Pullyu says:

    Pedandic Grammar Nazi note:

    “New Enegy [sic] Vehicles (plug-in vehicles)…”

    First, that’s “Energy” not “Enegy”.

    Second, the Chinese term translated as “New Energy Vehicles” does not refer only to plug-in EVs. It would be better translated as “Alternative Energy Vehicles”, and the category includes cars powered by fuel cells. I don’t recall if it includes vehicles powered by CNG, or not.

  6. Pushmi-Pullyu says:

    Not surprising to see the central Chinese government taking this step. They’ve done similar things in the past.

    The real problem, of which this is just a symptom, is the way that protectionism and influence-peddling on the Prefecture and local levels in China promotes local businesses, including auto manufactures, and keeps out competition from other regions. This strangles normal competition, leaving the market with far too many small auto makers, and doesn’t allow any of them to grow to the size needed to become a first-class (or world-class) auto maker.

    Unfortunately, the central Chinese government keeps treating the symptoms, and never moves to eliminate the underlying causes of corruption and influence-peddling on Prefecture and local levels. The local and Prefecture levels of governments in China remain in many ways unchanged since the days of Imperial China.

    “Plus ça change, plus c’est la même chose.” (The more things change, the more they stay the same.) — Jean-Baptiste Alphonse Karr (1808-1890)

  7. SJC says:

    They would like to have the many companies consolidate to fewer.

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