What happened: Chinese government is reportedly drafting new rules to cool the country’s overheated electric vehicle (EV) market, which contains nearly 500 companies. According to the rules, companies that want to farm out their manufacturing must have research and development (R & D) investment of no less than RMB 4 billion (around $580 million) in China over the last three years. A record of selling more than 15,000 purely electric passenger vehicles during the past two years is also required. The Ministry of Industry and Information Technology, charged with drafting the rules, said the regulations are still being revised.
Why it’s important: After the Chinese government positioned EV as one of the seven strategic industries in 2010 then bolstered the industry with subsidies two years later, hundreds of EV makers have emerged and been welcomed by local investors. China’s new EV automakers such as Nio and Xpeng Motors outsource production by forming alliances with traditional car manufacturers. However, a large number of domestic EV startups have yet to deliver their first commercial models to customers. Chinese authorities have been looking for ways to curb the EV market’s frothiness. It announced in late March it would reduce passenger vehicle subsidies by as much as 60% beginning in the late June, with an aim to “encourage market selection and prevent overheating” (our translation).