De-risking or De-coupling: Recent "Glocal" Trends in the New Energy Vehicle Sector

May 23, 2023 | BY

Susan Mok

Speculation is growing about the potential extent of U.S. and China decoupling, which brings increased costs and regulatory restrictions. Thinking creatively about supply chain solutions, including building overseas factories local to the end consumer, may mitigate those effects, write Scott Yu and Frank Jiang of Zhong Lun Law Firm

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Summary

  • The era of traditional globalization may be coming to an end as regulations and costs increase
  • "Glocalization" provides an alternative way forward, whereby factories are sited overseas avoiding cross-border issues
  • This approach has already been adopted by a number of automobile manufacturers and appears to be spreading
  • Both Chinese and foreign manufacturers of new energy vehicles can reap benefits from this approach, despite potential drawbacks including loss of subsidies and increased regulatory scrutiny