China to Implement new evaluation criteria for auto SOEs to boost NEV sector

China is expected to introduce new evaluation criteria for three centrally-administered auto companies, reported Economic Observer on Saturday, a move that aims to encourage investment and mergers and accelerate the companies’ development in the new energy vehicle (NEV) sector.

The new evaluation criteria for the three centrally-administered state-owned enterprises (SOEs) will include a range of new indicators such as market share, profit structure, technological innovation, and safety production, as per the Economic Observer report.

The three major central auto SOEs are FAW Group, Changan Automobile and Dongfeng Motor Corporation Ltd., all of which are early players in the Chinese NEV sector but have not shown significant growth in recent years. 

In 2023, the three centrally-administered auto SOEs made significant strides by investing nearly 36 billion yuan into NEVs ($5 billion), accounting for over 60 percent of their total investment, Gou Ping, vice chairman of the State-owned Assets Supervision and Administration Commission of the State Council (SASAC), said on Saturday. 

While centrally-administered auto SOEs possess considerable technological reserves in the NEV domain, cautious investment strategies due to regulatory and other factors have led to them missing out on opportunities resulting from intense market competition, the Economic Observer report said, citing an unnamed insider from the SOEs.

During the recently concluded two sessions, Zhang Yuzhuo, the head of SASAC, stated that SOEs are not developing fast enough in the NEV area and policies would be adjusted for separate assessments of the three centrally-administered auto SOEs.

Experts have pointed out that the existing evaluation criteria for SOEs do not fit the rapidly evolving NEV industry, which requires fast-paced iterations of vehicles and core components. Misalignment has reportedly dampened the investment enthusiasm of these companies, causing them to miss development opportunities, as per the Economic Observer.

The three centrally-administered auto SOEs have set ambitious targets for 2024, with FAW Group and Changan Automobile aiming to achieve NEV sales of 500,000 and 750,000 units, respectively, while Dongfeng Motor Corporation Ltd. plans to fully electrify its leading passenger car brands this year and aims to exceed 1 million units in NEV sales by 2025.

Gou said on Saturday that the centrally-administered auto SOEs will play to heir advantages, utilize their industrial resources and take a correct view toward the gaps and shortcomings in terms of their development in the NEV sector to accelerate transformation.

An SASAC official revealed that in addition to the NEV sector, SASAC intends to develop multi-dimensional evaluation indicators for several strategic emerging industries to promote their development, Economic Observer reported.

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