China plays hardball with hybrid and plug-in car companies

China plays hardball with hybrid and plug-in companies China is now the world’s largest car market with a growing middle class that makes it a prime location for electric and hybrid carmakers to set up shop. However, companies may not be so eager to show off their green cars due to new maneuvers by the government that may force foreign companies to share their technology with Chinese firms.

Under current government guidelines, foreign companies that make gasoline powered cars in the country have to set up a partnership with a Chinese firm. The cooperative gives the foreign carmaker a 50% stake in the venture and they retain the rights to the technology used in their cars.

The new deal created by the Ministry of Industry and Information Technology is an obvious way for Chinese companies to get a leg up in the EV world and shed their image as a smog-filled nation. After all, China banned leaded gasoline back in 2000 but it is still available in some parts of the country. The plan would essentially bring the kindergarten based idea of “share and share alike” to green cars. Foreign carmakers would have to partner with a Chinese company, but they wouldn’t have a controlling stake in operations.

What’s more troubling is that the each carmaker would also have to give up their trade secrets such as battery technology or electric motors to their new partners. This “sharing” clause was one of the main reasons that Toyota stopped the Chinese rollout of the Prius back in March.

While the plan hasn’t been approved, tactics like these are nothing new to the Chinese government when it comes to green technology. Last week, the United Steelworkers union filed documents with the office of the US trade representative and claimed that China is using unfair tactics to dominate the solar panel market. The union says that their bevy of bonuses to Chinese companies such as loans and forcing foreign firms to share their technology violate rules set by the World Trade Organization. Sound familiar?

If there are no vocal objections to the deal in the Chinese government, the measure could be enacted as soon as October. It will be up to companies such as Chevy, Nissan, and Toyota to see if sharing their secrets is a cheaper option than shipping cars to China.