China has issued a directive to its carmakers, urging them to keep advanced electric vehicle (EV) technology within the country. This move comes as Chinese automakers, including BYD Co and Chery Automobile Co, expand their global footprint by building factories in countries like Spain, Thailand, and Hungary to avoid tariffs on Chinese exports.

The Ministry of Commerce (Mofcom) held a meeting in July with over a dozen automakers, advising them to export knock-down kits for final assembly abroad rather than complete vehicles. This strategy aims to safeguard China's EV industry know-how and mitigate regulatory risks. Additionally, carmakers were cautioned against making auto-related investments in India and were instructed to notify Mofcom and local Chinese embassies before investing in Türkiye.

This directive could impact Chinese automakers' efforts to globalize and may affect European nations hoping to attract Chinese investment for economic growth. Despite these challenges, companies like BYD are moving forward with plans to establish factories abroad, such as a facility in Türkiye expected to produce 150,000 cars annually and create up to 5,000 jobs.