China Urges EV Makers: Ditch the Discounts, Double Down on Innovation & Quality

Beijing’s latest mandate cuts through the noise—EV firms must prioritize R&D over race-to-the-bottom pricing. No more cheap tricks; build something worth buying.

Why it matters: The world’s largest EV market is done subsidizing laziness. Either innovate or watch Tesla (and its stock price) lap you—again.

Finance jab: Wall Street analysts still betting on ‘discount-driven growth’ might want to check their spreadsheets—and their sanity.

China is making significant advances in vehicle battery technology

In a separate announcement on July 15, the Commerce Ministry said any overseas transfer of eight key battery manufacturing technologies would require a government license. The rule applies to exports via trade, investment, or technical partnerships and takes effect immediately. 

Officials said the measure could cement China’s leading position in EV battery production and discourage Chinese automakers from establishing factories abroad. Chinese firms have made significant breakthroughs in battery design over the last 5 years, cutting costs while extending driving range. 

The latest generation of lithium‑ion cells relies on iron and phosphate, a cheaper and safer mix compared with nickel, cobalt, and manganese blends. These batteries sit at the heart of China’s ability to build electric vehicles at prices below those of many petrol and rival EV models overseas. The EU has pressed Chinese battery and car producers to establish factories within its borders, a condition for constant sales growth.

The US is more cautious but is reviewing plans for two Chinese battery plants in Michigan. If approved, those plants would be among the first major Chinese battery facilities in the United States. These new battery export rules come almost 3 months after Beijing introduced export licenses for seven rare earths and magnets. This move has already shaken Western and Japanese firms that rely on those materials for robots, advanced electric motors, and cars. 

Shenzhen-based BYD, which overtook Tesla recently as the world’s largest electric car manufacturer, unveiled its lithium iron phosphate (LFP) battery 5 years ago, replacing expensive NCM with phosphate and iron to reduce fire risks. Rival Contemporary Amperex Technology Co. Limited (CATL) in Ningde unveiled a similar design shortly after. In comparison, companies from South Korea, Germany, Japan, and the United States still mainly rely on NCM batteries.

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