Beijing to Require Export Licenses for Electric Cars
A Move to Curb Automakers' "Involution" and May Ease Trade Tensions With EU
China announced on September 26, 2025, that it will require export licenses for pure-electric passenger vehicles—excluding hybrid models—effective January 1, 2026. The policy, jointly issued by the Ministry of Commerce and three other agencies, aims to “promote the healthy development of new energy vehicle trade.”
I believe that the primary objective of incorporating pure-electric vehicles into the export licensing system is to address internal industry involution—specifically, to curb a race-to-the-bottom price war among Chinese automakers. By implementing export controls, the policy seeks to shift manufacturers’ focus from volume-driven expansion to a more value-based competition. Under the licensing, companies will be incentivized to export higher-margin models and invest in sustainable overseas operations, including localized after-sales services and compliance adaptation.
While the policy is principally aimed at restructuring domestic competition, it is also likely to have a stabilizing effect- by tempering the pace of China’s EV exports, the measure may help alleviate concerns in Europe, where regulators have previously imposed anti-subsidy tariffs and explored measures such as minimum price mechanisms. Furthermore, as the policy governs only direct vehicle exports, it may accelerate the trend of Chinese automakers establishing production facilities directly in key overseas markets, like Europe. In this sense, the move can be seen as indirectly de-escalating the trade relationship between China and the EU.
The new rule adopts the framework of a 2012 policy designed to regulate auto and motorcycle exports. There’s an interesting parallel to the experience of China’s motorcycle industry. The setbacks of China’s motorcycle industry in Southeast Asia are widely attributed to destructive price wars and poor quality, serving as a cautionary tale. So the new EV export controls represent an effort to learn from the past and avoid a repetition of history.
Below is the translated version of the policy document and response from Industry associations：
Announcement on the Implementation of Export License Administration for Pure-Electric Passenger Vehicles
Issuing Unit: Foreign Trade Department
Document Number: Announcement No. 54 of 2025 of the Ministry of Commerce, the Ministry of Industry and Information Technology, the General Administration of Customs, and the State Administration for Market Regulation
Date of Issue: September 26, 2025
In order to promote the healthy development of new energy vehicle trade and in accordance with the relevant provisions of the Foreign Trade Law of the People’s Republic of China, the Ministry of Commerce, the Ministry of Industry and Information Technology, the General Administration of Customs, and the State Administration for Market Regulation have decided to implement export license administration for pure-electric passenger vehicles . The relevant matters are announced as follows:
Export license administration shall be implemented for goods described as “Other motor vehicles for the transport of persons, equipped only with an electric motor” (with vehicle identification code (VIN)), with reference to Customs commodity number 8703801090.
The qualification requirements for enterprises applying for export qualifications, the management method, application procedures, and the application for and issuance of export licenses shall be implemented in accordance with the relevant provisions of the Notice on Further Regulating the Export Order of Automobile and Motorcycle Products (Shang Chan Fa [2012] No. 318) issued by the Ministry of Commerce, the Ministry of Industry and Information Technology, the General Administration of Customs, the former General Administration of Quality Supervision, Inspection and Quarantine, and the former Certification and Accreditation Administration . Customs inspection of exported pure-electric passenger vehicles shall be based on the current and effective Catalog of Import and Export Commodities Subject to Compulsory Inspection .
This announcement shall come into effect formally on January 1, 2026 .
Ministry of Commerce
Ministry of Industry and Information Technology
General Administration of Customs
State Administration for Market Regulation
September 26, 2025
China Chamber of Commerce for Import and Export of Machinery and Electronic Products published its response:
纯电动乘用车出口涉证管理有助于汽车贸易行稳致远
Export Licensing Management for Pure EVs Helps Ensure Stable and Sustainable Automotive Trade
Electric passenger vehicles represent a crucial category in China’s vehicle exports. With the development of China’s new energy vehicle sector, EVs—driven by energy conservation and environmental protection principles—have become globally celebrated products. The rapid expansion in export scale and market reach has effectively enhanced the quality and average unit price of complete vehicle exports, driving overall export growth and serving as a vital lever for stabilizing foreign trade, optimizing industrial structure, and promoting cooperation. According to customs data, electric passenger vehicles rank as the top export category, with 1.385 million units exported from January to August 2025, accounting for 28.1% of total vehicle exports.
However, since EV codes have not yet been included in the export licensing catalog, manufacturers cannot effectively control the overseas distribution of their products. China-spec vehicles are often unsuitable for destination markets, and some brands lack comprehensive overseas service systems, hampering the healthy development of EV exports. The “Notice on Further Regulating the Export Order of Automobile and Motorcycle Products” (Commercial Production Notice [2012] No. 318), jointly issued by the Ministry of Commerce, Ministry of Industry and Information Technology, General Administration of Customs, AQSIQ, and CNCA, remains an essential document for regulating automotive export order and promoting high-quality export development.
Incorporating pure EVs into export licensing management aligns with the needs of healthy EV export development and high-quality international competition. This is reflected in several key aspects:
First, continuously improving automotive export management is essential for China to guide domestic industrial upgrading while participating in international supply chain cooperation amid globalization. As a pillar industry of the national economy, the automotive sector should lead by example in foreign trade. Legally refining the export licensing management catalog is fundamental to achieving high-quality automotive internationalization.
Second, standardizing export order accelerates the Chinese automotive industry’s transition toward “better, newer, and higher-quality” development models, forming a crucial link in building high-level domestic and international dual circulation. Through smooth international cooperation, this drives Chinese automotive industry upgrades and creates positive synergies with the domestic market.
Third, strengthening brand building and after-sales service enhances comprehensive competitiveness in overseas markets. Chinese brand vehicles competing with high quality, reasonable pricing, and excellent after-sales service provide consumers with more diverse and superior choices, accelerating global automotive industry innovation in both technology and business models, ultimately benefiting consumers worldwide.
Fourth, encouraging adaptive development meets diverse international market demands. Adaptive development, based on deep understanding of local markets, culture, regulations, environment, and user habits, involves tailoring products for specific markets while projecting a global, trustworthy brand image. China’s automotive internationalization continuously expands product and service boundaries, forging a path that respects innovation and diversity.
Fifth, enhancing the industry’s risk resilience to navigate complex and volatile international trade environments, progressing from “going out” to “going deep” and “going up,” ensures stable and sustainable automotive exports. Deep internationalization drives coordinated development of localized supply chains, after-sales services, financial services, and even marketing approaches. This not only creates local employment and tax revenue but also deeply integrates automakers with local markets, facilitating the transformation from “manufacturing-centered” scale output to “user-centered” value creation.
(Sun Xiaohong, Secretary-General of the Automotive Internationalization Committee, China Chamber of Commerce for Import and Export of Machinery and Electronic Products)
More: see Gasgoo from today, carmakers want to eliminate parallel imports because they undermine the very high markups on cars in official dealership channels.
The arithmetic, which is pretty obvious from your article:
Domestic (Chinese) parties, such as a dealership, buy a car at wholesale (as they normally do), mark it "sold" and ship it to ... the Philippines or Peru, and sell it at a high enough price to (i) pay cash to their OEM supplier in China, (ii) pay for transport and tariffs (including any bribes* to result in no or low tariffs), and (iii) sell it in that market at a high enough price to earn more than if they sold it as a new car inside China. That's only possible because official imports carry a huge markup. Stolen cars are another source of parallel imports (see glennmercer.substack.com), but I doubt China is a significant source of stolen cars.
[* There's currently a bribery scandal unfolding in the Philippines, with construction company owners driving Rolls Royces that never passed through customs but somehow got a license plate as an ordinary vehicle, which mean not only zero tariffs but zero domestic luxury taxes.]
...sigh, I'd better stop commenting and focus on my own substack, I'm drafting one on economic methodology in the guise of a review of a book on Chinese high politics....
So cut demand to bolster domestic prices? – I don't think so. However, it could limit "grey" exports by dealers or other non-OEM players, so help the better-run OEMs build up their distribution networks. As per the article.
However ...
Licensing exports is not the same as limiting grey-market imports, because once vehicles are on a ship, ownership passes through many more hands before reaching the final (initial) owner, and once registered it's a used vehicle which opens up more and even less controlled distribution channels. Now the new rule(s) look like they may cover used vehicles, as the draft states "...enterprises applying for..." which could then be strictly applied. Now back in the bad old days the Chinese government was unable to restrict grey market imports, I met an entrepreneur / dealer (in Hong Kong) who sold 5,000 Nissans in one day, all grey market, to an entity on the Chinese side (Guangdong Prefecture, but maybe Guangzhou) with an unused hard currency allocation. That would have been at the tail end of the 1980s or early 1990s, I won't pull out books to pin down when that forex regime ended.
Nissan, or at least moderately senior people on Nissan's export side, had to know because of the number of vehicles, however Nissan has a long history of shady shenanigans. Pressure at Chinese OEMs for revenue today may overcome internal barriers to investing in distribution for the long term. So what the MIIT / Customs or whomever is told (and potentially what the top at the car company are [traceably] told may not be what happens on the water, or on the ground once cars are unloaded.