With the amount of capital flowing into and around the Chinese’s electric vehicle market – now the largest in the world – anyone would think that making money from e-mobility (or at least spending money on it) was primed to adopt the classic Jacksons’ lyrics “As easy as 1, 2, 3”.
Three notable recent examples to illustrate this:
- Deal 1: Buffet-backed BYD just raised $3.9 billion with an issuance of new shares in Hong Kong, bringing the company’s market cap to US$91 billion.
- Deal 2: China Evergrande raised US$3.4 billion from six new strategy investors as it seeks to shore up its balance sheet.
- Deal 3: And then, just last week, Geely and 30 or so other institutional investors (allegedly – see the article below) provided Faraday Future a road back-to-the-future from the LA start-up’s own financing difficulties.
Headline grabbing, yes, but do we have the infrastructure – physical and regulatory – to cope with a surge in the production and sales of EVs and their next of kin, the AV, and other connected vehicles?
On the physical side of things, as I mused upon last year, China is all-in on digital infrastructure. I would expect to see more of this push in the upcoming 14th Five Year Plan. In particular for connected vehicles, the country’s 5G rollout is progressing nicely – indeed accelerating. We have advised one international client on aspects of its charging post installation in China and I keenly watched an OEM’s branded charging posts being proudly installed at the foot of our office building just recently. Powering and communicating with all these new hi-tech cars should not be an issue.
On the regulatory side though, things are taking a little longer. While the likes of Alibaba are getting into private transportation as the next platform for offering their myriad of services to those captive within sleek-lined EVs and AVs – hands-free, eyes-free driving for the entirety of a customer’s commute to work is of course a platform operator’s and advertiser’s nirvana(!) – I am still not convinced that the rulebook under which this part of the digital economy of the future will be regulated will be ready in time.
China’s draft Data Security Law, for example, remains just that since its first public release in July last year. You may recall that I was not overly enamored with the DSL’s framework, because it was/is just too light-weight for companies’ operational planning and compliance. Although a second reading has been announced to be on the legislative agenda for as soon as possible, details on how the government has reacted to business’s and others’ feedback from the consultation period, and the resulting substance of the revised draft, are largely unknown.
Similarly, the latest proposals from Beijing on creating a market in which the data from connected vehicles, charging posts and the rest of the Internet of Things in China can be packaged up and monetised sounds hugely progressive, but how will the rules look; how will organisations’ and individuals’ interests be protected? The regulatory questions for e-mobility and other areas of China’s dynamic digital ecosystem remain many.
In China and other markets when new technologies get exciting, the conundrum is often the same. Should we slow hungry investors’ inevitable cash injection and the advancement of cutting-edge products to allow sensible rules to be put in place as early roadside guardrails, rather than have rule-makers apply the handbrake later on when we are already speeding along the expressway – à la Big Tech’s collision with Chinese supervisory authorities over the last couple of months? Or should the market drive itself, even if without a regulatory airbag, and just hope for the best?
I have a feeling that a lawyer’s response to those questions may not be the hare in the race, out in front for all to see and admire… But would it be the tortoise?
The deal adds to evidence that China’s local governments are upping the ante on the future of mobility amid rosy forecasts for rising penetration of green vehicles in the world’s largest car market.