Foreign automakers in China have been targeting the market due to the potential for the upcoming EV shift. However, global automakers are seeking a clearer path from ambitious regulators. As there is a lack of transparency and insufficient time lead can lead to inequality of “access to policy and standards drafting processes”.
This was revealed through a European Union Chamber of Commerce report that was published in September. There were no specific examples cited, however, it highlights the frustration among other automakers trying to enter the Chinese market. The top EV player globally, Tesla also had many challenges as it entered the Chinese market. Tesla vehicles are banned from military locations due to security reasons that the cameras may store confidential information. Despite Tesla stating that their information from China stays in the country and it doesn’t violate any regulations, the vehicles are banned to date.
Comparatively the US and EU regulations didn’t seem to have caused such difficulties. Satisfying the Chinese regulatory bodies seems a challenge only especially as the new EVs are coming to the market. In the past automakers entered the market, as Chinese regulations were based on Western equivalents. Now with the EV race, China is going forefront with the EV regulations. Considering the market size of the country, 40% of worldwide sales is seen as a natural consequence. Chinese authorities are starting to take the lead in international standards not only in the EV industry but other industries too.
Tensions at play for VW’s scramble
Volkswagen AG engineers did an expensive scramble last year to redesign a battery pack. The ID.4 electric SUV batteries had to be redesigned as a result of not meeting China’s requirements. The same battery pack passed Volkswagen and German government tests on heat management. Chinese requirements are aimed at making the vehicles such that they don’t catch fire the first five minutes after a crash.
There are no precise details on how the new standards would be effective to actually contribute to the automotive sector. Some state that the stubbornness of Volkswagen headquarters also created a mess for the company. Especially as Volkswagen was not ready to hear out that Chinese regulators are not going to get along with their point of view. In the end, Volkswagen had to send a team of engineers to spend six months on the improvements and other fixes.
A source said to Reuters, “Sometimes changing key components in an existing model is harder than making a new one and ID.4 is a good example of that.” Regardless of the opinions, overall there is a common notion that the regulations could be more clear. There were challenges like automakers didn’t have enough time to comply with the new regulations.