China may mandate local sourcing of EV components

Chiang, Jen-Chieh, Taipei; Jingyue Hsiao, DIGITIMES Asia 0

Credit: AFP

Amid a ramping up of import substitution, China may require EV suppliers to reduce sourcing of foreign-made components, a sign showing the global EV ecosystem may see a decoupling after the ICT supply chain

Japanese media Yomiuri Shimbun, citing sources, reported that China had asked China-based EV makers to source locally-made components for semiconductors and other electronic components, aiming to build a self-reliant local ecosystem. If China implements this policy, electronic components made by European, American, and non-Chinese Asian suppliers may be banned from Chinese-made EVs.

Yomiuri Shimbun quoted multiple sources saying that at a meeting held in November 2022, a senior official of the Ministry of Industry and Information Technology of China verbally requested EV makers to use domestically produced components without leaving any official document that required the exclusion of foreign investments. The sources added that EV makers were required to source a certain rate of components from Chinese suppliers, or they would face penalties.

The rumor comes after China's Ministry of Industry and Information Technology and six other government agencies introduced the Automotive Industry Stable Growth Plan (2023-2024), which stated that China would launch initiatives to increase new energy vehicle penetration and encourage automakers to develop and produce vehicles that can compete on the global stage. China also plans to build an alliance for automakers to internationalize and innovate, aiming to encourage information and distribution sharing among automakers.

Meanwhile, the policy aimed to build a mechanism to monitor changes and identify security risks to ensure the stable operation of the vehicle supply chain. According to Yomiuri Shimbun, China may introduce measures to assess the adoption rate of locally sourced components by the monitoring mechanism.