China is drafting measures to rein in overcapacity in the electric vehicle sector and channel resources in a more targeted way to a number of key production hubs throughout the country, according to people familiar with the matter.
Regulators are considering setting a minimum production capacity utilization rate for the EV sector, and provinces that aren’t meeting it won’t be allowed to greenlight new projects until surplus capacity comes online, the people said, asking not to be identified because the details are private.
The aim is to both guide automakers to areas in China where there is currently underutilized capacity and force the closure of car factories that have been built over the past few years but that are now redundant, the people said. The plan isn’t final and the production capacity utilization rate that’s being considered may change, the people said.
Representatives for the National Development and Reform Commission, which is guiding the measures, didn’t immediately respond to a request for comment sent after normal business hours. A spokesperson for the Ministry of Industry and Information Technology also didn’t immediately respond to a request for comment.