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New agreement for China’s ninth EV plant

NEVS and Iconiq sign the deal. Source: NEVS

As NEVS and Iconiq partner up, they join eight other companies manufacturing EVs, which are increasingly looking beyond the Chinese border

China is putting its energy into electric cars in a big way, but is it all for show? The country has a history of backing incredible megaprojects that can end up largely symbolic, as a method of asserting power in the international arena.

The licensing of nine electric car plants by the Chinese government may come as a surprise to those who know the power the government can command from being stingy with approvals.

According to Michael Dunne, “Chinese officials love to use licenses to shape their industries, and the electric-car sector is no exception. The government gets special powers derived from granting licenses.” The granting of very few licenses creates a perception of scarcity – “companies jostle frantically for approval before the ‘door’ closes.  Until China joined the World Trade Organization in 2001, China had granted rare auto-production licenses to only a handful of foreign players: Volkswagen, Jeep, GM, Honda, Suzuki, and Peugeot.”

Their tactics have changed, however.

China has become home to 169 “new-energy” car makers since 2009. The market mushroomed almost overnight when the government made a move to encouraging the production of alternatives to CEVs. However, as the South China Morning Post reported, few are likely to survive the wave of consolidation breaking this year as subsidies run out and the authorities get tougher on pushing actual results.

Additionally, rumour has it that new policy will be enacted to require that 8% of total car sales are EVs. Companies which overstep the 8% rule will gain credits, to detriment of the former car makers who can buy these up in order to carry on having a place in the Chinese market. For more information, see here.

As a result, China is an attractive market for those EV manufacturers able to sell their vehicles and with nine plants now agreed, its place on the global stage is undeniable.

Some are being as idealistic as to claim that China will be an exemplar of free trade in the 21st century. Indeed, the US Department of Energy reported that China alone accounted for 42% of global sales of PHEVs in 2016. 

Global partnership

The latest car plant to open comes from National Electric Vehicle Sweden (NEVS), a China-backed firm that bought SAAB’s assets out of bankruptcy in 2012. Its partnership with ICONIQ Motors will allow the two to cooperate, share technology and develop new vehicles, presumably with much emphasis on transferring former Saab expertise into new EV programmes in China.

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“I am happy to start this partnership with Iconiq who shares the NEVS vision of sustainable mobility,” NEVS President Mattias Bergman said in a statement. “Both companies will contribute to a better joint result.”

NEVS is not only looking to China as a market, but to the rest of the world. The multinational already has a production plant in Sweden and plans to launch two production cars before 2020.

Iconiq’s ‘SEVEN’ MPV EV concept has been pre-ordered by the United Arab Emirates government and Chinese bank CITIC.

The granting of more licenses and the outward-looking tendencies of certain Chinese companies have begged the question of how far the Chinese EV market can be competitive with the rest of the world…

Nevertheless, NEVS does have the advantage of a European pedigree via its ex-Saab facilities and staff. This is sure to form a key component of its marketing strategy as the two parties look to sell beyond China’s borders. And, as the ninth plant to be approved, they may also have just enough time to beat some of their competitors to market.

 

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