China bans new fossil-fuel vehicle plants

A package of new rules for China’s auto industry will place a ban on setting-up plants that produce fossil-fuel driven cars, in addition to lifting the caps on foreign ownership announced in April.

The proposed list, issued by the country’s top economic planner the National Development and Reform Commission would essentially overhaul the existing development policy for the industry in place since 2004. The new rules could come into effect as early as the end of the year, sources told Caixin.

There will no longer be a 50% ceiling on foreign firms’ ownership stake in businesses producing cars in China, although any new factories intended to produce fossil-fuel burning vehicles will be prohibited. Therefore the majority of foreign commercial vehicle companies will not be allowed to set up their own plants, but will have to stay within existing joint ventures.