China will encourage Internet companies like Leshi Internet Information & Technology Corp. to develop electric vehicles as they have the potential to create a new manufacturing model for the auto industry, according to the industry and information technology minister.
“We’ll encourage them because they can totally outsource their production,” Industry Minister Miao Wei said today in Beijing as he left a National People’s Congress session at the Great Hall of the People. “To cite one example, Foxconn, they don’t have their own mobile phone but they produce Apple’s mobile phones.”
China, which is promoting the use of electric vehicles to reduce the reliance on imported oil and to cut tailpipe pollution, is experimenting with allowing companies outside the manufacturing industries to develop EVs as a way to inject innovation and spur competition. The initiative is taking place at a time when Silicon Valley companies from Apple Inc. to Uber Technologies Inc. are getting into transportation from cars to drones to space ships and pioneering new business models.
Miao’s comments are the clearest indication to date that technology companies will be allowed to develop electric vehicles. His ministry jointly regulates the auto industry with the National Development and Reform Commission.
The biggest hurdle for non-automakers entering the industry had been a stipulation that companies had to possess vehicle production capacity, in addition to experience in product research and development and vehicle design.
They also needed at least 15 sample EVs that met national technical standards, according to the draft of the policy posted on the website of the National Development and Reform Commission in November for public feedback.
Leshi climbed 4.2 percent in Shenzhen trading for the biggest gain in two weeks. Shenzhen Desay Battery Technology Co. surged 10 percent. BYD Co., a maker of batteries and electric vehicles, climbed 6.1 percent in Hong Kong trading, while the benchmark Hang Seng Index slipped 1.1 percent.
“The rally in battery makers and automakers like BYD is driven by speculation that these capital-intensive companies stand to gain from cooperating with cash-rich Internet companies,” said Harry Chen, an analyst with Guotai Junan Securities Co. in Shenzhen. “The likely model is that they form joint ventures and seek mutual benefits.”
Miao said Thursday that the policy will probably be finalized in a “couple of months.” After that, companies can apply for the licenses and relevant panels of experts will be convened to review the applications, he said.
Miao also told reporters that China will step up its efforts to build more charging stations for alternative- energy vehicles so as to resolve a bottleneck that’s holding back sales. He said he expects sales of alternative-energy cars, China’s term for plug-in hybrids and electric vehicles, to improve this year.