Big development for Lynas, EVs, ROW automakers.
China to allow full foreign ownership in auto industry
ASSOCIATED PRESS
5:17 am EDT April 17, 2018
BEIJING – China announced plans Tuesday to allow full foreign ownership of automakers in five years, ending restrictions that helped to fuel its escalating dispute with President Trump and strained relations with other trading partners.
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[Special rule for EV producers]
Limits on foreign ownership of electric vehicle producers will be eliminated this year, the Cabinet’s planning agency said. That will be followed by a similar repeal for makers of commercial vehicles in 2020 and passenger vehicles in 2022.
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Until now, global automakers such as General Motors Co. and Volkswagen AG have been allowed to own no more than 50 percent of a joint venture with a Chinese partner and could invest in no more than two joint ventures.
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My take: EVs are so easy to build that Chinese manufacturers can literally pop up overnight to serve regional customers using Chinese-sourced parts. These guys will be pushed out unless they get backing and the SOEs are probably nearing the end of their acquisition phase.
Xi now lets ROW in to pick up the scraps of EV-only producers, which provides additional demand for Chinese upstream industry and more access to IP, but doesn't include more valuable and larger companies (like Chery and Byd) whose fates are apparently yet to be determined by the Communist party.
Appears to be a very confident move, approaching largesse (but we know it's not).
No loss of face to Trump.
It's a win-win for China.
Remains to be seen what ROW can do with this opp in the next five years. Much depends on Chinese State; this is not laissez faire on tap. I'm skeptical, but it can only help Lynas and could be significant.
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