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China to encourage internet firms to develop electric cars

Thursday, March 5, 2015 - 16:27

[BEIJING] 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.

Mr 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 per cent in Shenzhen trading for the biggest gain in two weeks. Electric carmakers including BYD Co and Geely Automobile Holdings Ltd that may pursue contract manufacturing also advanced.

BYD climbed 5.5 per cent while Geely Auto, which has a joint venture to produce electric cars with Kandi Technologies Group Inc, advanced 2.4 per cent as of 3:35 pm in Hong Kong trading. Shenzhen Desay Battery Technology Co, a battery maker, surged by the 10 per cent daily limit, while the benchmark Hang Seng Index declined 1.2 per cent.

Mr Miao said on 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.

Mr Miao also told reporters earlier on Thursday 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.

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