May
China’s protectionist laws are currently being relaxed when it comes to electric vehicles, but there are still some rigorous restrictions. For example, Chinese electric vehicles need to be powered by Chinese batteries.
A new report now shows that Geely found a workaround for Volvo’s electric vehicles by using Korean batteries made in China and the competition isn’t happy about it.
China has some of the most generous electric vehicle incentives in order to accelerate EV adoption in an attempt to curb their air pollution issue.
But for a vehicle to be eligible for those incentives, it needs to be approved by authorities and for some subsidies, it includes being manufactured in China with Chinese batteries.
According to a report from the Wall Street Journal, Geely set up a subsidiary called Zhejiang Henguyan, which licenses and makes the exact same high-end batteries made by LG Chem in Korea.
The report revealed:
“A Geely spokesman confirmed that it struck a deal late last year to license LG battery technology, and that LG Chem has helped Hengyuan set up a production line. The batteries will also be used in cars made by another Geely brand, Lynk & Co., the spokesman said.
“This isn’t the use of a loophole or a back channel,” he said, adding that other companies “with the proper foresight could realize and create the same deal if required.”
Yet, other foreign companies are now complaining to the government claiming that it is an unfair a
dvantage.
While it’s unclear if it’s actually a loophole that needs to be fixed or simply something that the rules actually encourage since the batteries end up being produced in China. However, foreign companies claim they can’t do the same as Volvo because the Swedish automaker is unfairly treated due to the Chinese connections of its Chinese owner Geely.
Volvo CEO Hakan Samuelsson admitted last year that Geely allowed them to get control over their business in China:
“This is our second home,” Mr. Samuelsson said in response to a Journal question during a round-table interview last year. “We are the only [foreign auto] company that really has control over business” in China.
It looks like the tension is increasing as China’s ZEV mandate is starting next year and foreign automakers want to solidify their place in the biggest auto market in the world.