China May Halt EV Production Permits

China’s central government is likely to stop issuing permits to manufacture electric vehicles to avoid a capacity glut, sources tell Bloomberg News.

The government has issued 15 permits in the past 14 months through its National Development and Reform Commission. The most recent license went to Volkswagen AG’s joint venture with Anhui Jianghuai Automobile Group Corp.

Sales of plug-in hybrids and all-electric vehicles in China roughly quintupled to 507,000 units in 2016 since the government began supporting such vehicles in 2014, according to the China Assn. of Automobile Manufacturers.

At the same time, Bloomberg says Chinese companies have announced EV production plans totaling at least 98 billion yuan ($14.4 billion). The projects amount to a combined capacity to make 2.9 million vehicles per year.

Bloomberg notes that a freeze on additional permits could help such early EV makers as BYD Co. and BAIC Motor Corp. The move also will delay plans to jump into the EV market by startups led by entrepreneurs William Li (Nio) and Jia Yueting (LeEco).