Ministry of Commerce intensifies efforts to ensure even playing field for EVs by cracking down on regional protectionist policies

China has made dramatic strides in breaking down on potential monopolistic practices in pure electric vehicle sales. In the run up to implementing policies that enforce the existence of unified national standards for EV subsidies, the government has also ordered a comprehensive investigation looking into regional protectionist and other monopolistic practices. Qiu Zhongyi, head of the Ministry of Commerce, said that the government hopes the investigation will help them "understand the challenges [the EV industry] is facing." The investigation will not only cover imported vehicles, but also cover autoparts, used vehicles and other aspects, aiding the government in coming up with a through plan to tackle the challenges.

Last December, the Ministry of Commerce, in association with 11 other ministry-level committees, drafted legislation to combat regional protectionist and monopolistic practices. The legislation compiled a list of existing economic issues and assigned key tasks to rectify said issues, which include issues with regional governments requiring multinational enterprises to establish legal representative organizations in their region of jurisdiction, discriminatory pricing policies and excessive legislation forcing people or bodies to purchase products or services from a specific manufacturer or provider.

The Ministry of Commerce followed up with an announcement last month that it was commencing a survey investigation aimed at uncovering the extent of the existing problems and ensuring that they don't interfere with the healthy development of the EV market. The survey aims to verify whether or not particular regional authorities are using their power to enforce protectionist or monopolistic practices. The survey also includes a program in which enterprises rate the fairness of the regional authorities' practices as well as offer their own suggestions and advice.

The legislation and subsequent investigation have no doubt been spurned on by the increasing amount of media and government attention regarding unfair regional policies. The first major instance of this was in 2013 when certain dealerships were accused of fixing prices for import cars. That August the Ministry of Commerce's Press Spokesman Shen Danyang stated that any manufacturers or dealerships found of abusing such practices would be penalized accordingly.

Soon thereafter, a report on CCTV's Economy 30 Minutes highlighted suspicious problems with automobile maintenance and aftersales services. The report documented a case of repair fees for a minor fender bender totaling 100,000 RMB ($16,253), as well as another case where a dealership calculated the total costs of all of the autoparts in an Audi Q7 well exceeding the price of the car new. Dealerships' insistence on not repairing parts, only replacing them, as well as the exorbitant fees they charged, sparked a great deal of outrage. The fact that customers can only take their vehicles to certified 4S dealerships for maintenance under threat of voiding their warranties, only to find out that those dealerships charge prices for autoparts over three times their original import values, added even more fuel to the fire.

A report on the same program last month highlighted issues with the severe pricing discrepancies for foreign automobiles, with their Chinese price being over three times their original price overseas. Insufficient consumer protection was cited as a major factor behind the problem. Even the hot-selling Tesla Model S was subject to criticism due to a over 40,000 RMB ($6,501) discrepancy between its Chinese and US prices.