NIO’s GC shares the challenges and trends in China’s electric vehicle industry

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Has been hailed as the Chinese Tesla, NIO is one of the few companies focusing on electric vehicle manufacturing, design, sales and service. It currently has five international offices in Silicon Valley, Munich, London, Hong Kong and mainland China. Fang Liu, the general counsel and the chief compliance officer of NIO, shares her insight to China Business Law Journal.

Q: Could you just tell us the legal trends and challenges in the Electric Vehicle (EVs) industry?

Liu Fang: I think the trends are good and bad. The good thing is, the electric vehicle sector is in the country’s 13th Five-Year Plan, so it is definitely a new thriving industry. But the bad thing is, we see the economy right now this is still slowing down. Even though in the past 10 years from 2011-2017, you see a big forming in auto industry, we do see consecutively 15 months slowing down or decrease in the sales volume. So right now, actually this year, I personally feel it is quite challenging, especially for electric vehicle, because of the slowing down of the economy. As the decrease of sales volume impacts the sales of electric car, the country implemented some new regulations restricting new entry or new companies into this sector. It is also going to phase out the subsidies to the customers purchasing the cars.

In terms of a regulatory change, I think there were two new laws implemented last year, which are, in some sense, helping this sector to grow. One of the regulations called in Chinese; “The policy on investment of new electric vehicle industry”. The other one is the guidelines on how to regulate this industry. In those two big regulations, I would say it is the guideline for private investors to look into this sector. When they want to do certain investment activities in China. I think those two policy and regulation are needed to look at.

I personally know and I did a little study on these two regulations. What I can say is the regulation or policy itself tightened the investment for private sector investors to invest in automotive sector. But it opened some doors or added some flexibilities for private investors to invest in new electric vehicle sectors. Because in the past, in China, you can see a lot of local capacities, we call it manufacturing capacity, was fully occupied or there are some extra capacities that are no used. So the government do not want people to keep investing without anything to do with the current capacity of traditional automotive. They want to restrict investment in the traditional automotive sector but they want to add new investments into the new electrical vehicle sector.

Q: What are your view and outlook for the autonomous driving sector globally?

Liu Fang: Autonomous driving will definitely be the big trend and the most important trend for new vehicle, electric vehicle companies or for the whole industry. This is what I see. It is very important for everyone in automotive industry and electric vehicle manufacturers. This is just the future technology changes. So, you need to pay attention to.

The challenge the company is facing right now is globally the industrial auto sector is really at the beginning of R&D activities and IP applications. It is really at a very early stage for the automotive companies and the new energy companies to look at these sectors. So you need to, at the one hand, look at the regulations. But at the other hand, you also need to look at what kind of technologies you have.

Autonomous driving definitely would be a very important technology for this (electric vehicle) sector and for each country, from data protection and country’s security perspective. I can see different countries right now are implementing or enacting some regulations to regulate autonomous driving-related to deal with technology, cross-border IP sharing, cross-border data sharing.

To me or the company, the challenges we are facing right now is as we have our R&D teams located in Silicon Valley, the top researchers we have are in there, and we also partly have our resource teams here. There a certain data you need to get from here and foreign teams need data here to do the research. Some other business partners need the data and technologies here to help them in doing research. So you really need to have a lot of technology, IP, and ideas exchanged. But to what extent you cross the wall and touch the red line, you need to be really careful.

This interview was conducted during the CBLJ Forum at Grand Hyatt Hotel, Shanghai, on 12 November, with the theme “Seizing Cross-Border Opportunities – Managing Global Risks”. For more information about the conference and videos of the forum sessions, please visit our CBLJ Forum 2019 webpage here.