The "Provisions on Investment Management in the Automotive Industry" is Order No. 22 promulgated by the National Development and Reform Commission on 10 December 2018, officially taking effect on 10 January 2019. Serving as a comprehensive policy framework for automotive investment management in China's modern era, the provisions comprise nine chapters and forty-eight articles. It completely supersedes the investment-related sections of the former "Automotive Industry Development Policy" as well as documents such as the "Opinions on Improving the Management of Automotive Investment Projects", establishing a new governance system spanning internal combustion engine (ICE) vehicles, battery electric vehicles (BEVs), and intelligent connected vehicles across the entire chain of investment direction, market access criteria, filing administration, and ongoing and post-event supervision.
The most significant reform under these provisions is the comprehensive revocation of the long-standing automotive investment project approval system. With State Council approval, projects previously subject to provincial government approval under the "Catalogue of Investment Projects Approved by the Government (2016 Edition)"—including newly established Sino-foreign joint venture passenger car manufacturing plants, new BEV passenger vehicle manufacturers, and other vehicle investment projects—have now transitioned entirely to a filing (registration) system. Under this mechanism, complete vehicle (CBU) investment projects are registered with provincial development and reform authorities, while other related investment projects fall under local development and reform bodies.
The core rationale behind this transition is that, following decades of robust growth, China's automotive industry footprint is largely established, with key domestic players demonstrating significantly enhanced capability to independently allocate production resources. As a result, the necessity for rigid pre-approvals has diminished, shifting the focus towards regulating market conduct through explicit entry criteria and stringent post-market oversight.
The regulations set unambiguous "red lines" for new investments in conventional ICE vehicles:
The following projects are strictly prohibited:
Establishment of new standalone ICE vehicle manufacturing enterprises
Expansion of ICE vehicle production capacity across passenger car and commercial vehicle categories by existing carmakers
Complete cross-provincial relocation of existing ICE automakers (unless explicitly incorporated into national regional development masterplans)
New capital investments into ICE vehicle enterprises specifically flagged under regulatory special watchlists
Stringent criteria for capacity expansion: Existing carmakers planning to expand production capacity must fulfill multiple prerequisites, including maintaining capacity utilisation rates and new energy vehicle (NEV) production shares above the industry benchmark over the preceding two consecutive years, alongside an R&D expenditure exceeding 3% of core business revenue. For new off-site ICE passenger vehicle expansion projects, the planned annual production capacity must be at least 150,000 units, while the manufacturer's total output from the prior year must not fall below 300,000 units.
The policy further tightens entry requirements for new standalone BEV manufacturing investments to curb reckless project expansion and low-value redundant capacity build-ups.
Provincial prerequisites: The host province's automotive capacity utilisation rate must exceed the national industry average across the previous two years, and all existing newly built standalone BEV facilities within the same vehicle segment must be completed and operating at full designated capacity.
Corporate entity requirements: Applicants must maintain a dedicated in-house R&D team and hold proprietary invention patents for core BEV technologies; primary technical benchmarks must meet leading industry standards; and the company must commit to warranty underwriting or performance guarantees covering product quality for a minimum of 5 years post-commissioning.
Major corporate shareholder criteria: Controlling shareholders must hold at least a one-third equity stake, agree not to divest capital before the facility achieves target output, and possess proprietary intellectual property and manufacturing capabilities for core 'three electrics' (battery, electric motor, and electronic control) components. Speculative pure-financial investors are firmly barred.
Minimum capacity thresholds: An annual production capacity of no less than 100,000 units for BEV passenger cars and no less than 5,000 units for BEV commercial vehicles.
The provisions clearly outline key strategic sectors earmarked for prioritised industry development:
New Energy Vehicles (NEVs): Advanced lightweight materials, vehicle control units, high-efficiency drive systems, next-generation traction batteries, and fuel cell technologies
Intelligent Connected Vehicles: Complex environmental sensing, high-performance in-vehicle compute platforms, advanced automotive sensors, dedicated system-on-chips (SoCs), and vehicle operating systems
Energy-Efficient Vehicles: Thermal-efficient internal combustion engines, advanced automatic transmissions, and dedicated hybrid powertrain systems
Traction Battery Recycling & Lifecycle Management: Second-life cascading utilisation, material recovery, recycling processes, and eco-friendly disposal infrastructure
Auto Parts Remanufacturing: Advanced remanufacturing technologies and industrial processes for high-value automotive components
The rollout of these provisions signals a pivotal paradigm shift in China's automotive governance, moving decisively from traditional "ex-ante administrative approval" to "ongoing and post-market supervision". On one hand, cutting red tape lowers institutional operational friction for enterprises, providing clear regulatory headroom for cross-industry entrants and innovative mobility models; on the other hand, strictly quantified barriers to entry—such as the 100,000-unit minimum output rule and the 3% R&D spending benchmark—effectively weed out low-end duplicative ventures and speculative capital, guiding the entire automotive landscape from aggressive volume expansion toward sustainable, high-quality development.
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