A production line is seen at a subsidiary of Beijing Electric Vehicle Co., Ltd., a new energy vehicle producer, in Cangzhou, Hebei province, on July 6, 2019. (Photo/Xinhua)

The National Development and Reform Commission, the body overseeing China's economic policy, has issued a "non-public" notice that it intends to review investment and production practices within China's new energy vehicle (NEV) market amid concerns of structural overcapacity, according to a report by yicai.com.

The notice requires local regulators to provide details relating to ongoing projects, construction progress and annual production figures for pure electric vehicle manufacturing ventures approved and filed since 2015. The notice also requires specifics addressing of the status of NEV investment and projects yet to be completed. 

The review will likely place scrutiny on the likes of NEV manufactures Evergrande and Baoneng, requiring details addressing the status of manufacturing for vehicles, parts and components dating back to 2017.  

An industry observer told the Global Times on Wednesday that the investigation had been raised due to concerns of overcapacity in the sector, adding that the sector would come under pressure from a surplus of investment and low capacity utilization rates. 

Regulators had previously emphasized proposals to strengthen supervision to curb the growth of nonviable projects and to encourage healthier, higher quality industry development. 

Based on regulator policy, the sales of new energy vehicles as a proportion of total new car sales should be reduced from 25 percent to about 20 percent, aimed at promoting industry efficiency, a greater emphasis on research and development, in addition to building NEV specific infrastructure. 

China has encouraged high-tech companies to enter the auto industry to improve manufacturing practices and advance the development of smart cars, ultimately aimed at restricting new capacity and clamping down on existing idle capacity. 

Shares of China Evergrande New Energy Vehicle Group plunged 6.65 percent to HK$ 22.45 yuan per share on Hong Kong's stock exchange. Evergrande responded that the matter was subject to an internal assessment and that an official response would be issued following verification with authorities. 

Global Times