VW to Tesla Set to Win From China Move to Remove Ownership Caps

China will let foreign automakers from Volkswagen AG to Ford Motor Co. own more than 50 percent of local ventures, removing a two-decade restriction and giving a boost to global companies seeking to capture a greater share of the world’s largest car market.

Electric-car makers such as Tesla Inc. will see the swiftest benefit, with ownership limitation for such businesses lifting as soon as this year. The cap for commercial vehicles will be eliminated in 2020 and that for passenger vehicles in 2022, the agency that oversees industries said Tuesday.

The move may help diffuse tensions between China and the U.S. after President Donald Trump’s intensified rhetoric risked an all-out trade war. Companies from Daimler AG and BMW AG to General Motors Co. and Toyota Motor Corp. are set to find it easier to manufacture and do business in China, while local makers will be under increased pressure to speed up the building of their own brands.

China’s announcement comes on the heels of a similar move for the financial industry last week.

“In a decade, foreign carmakers will gradually become all independent and Chinese companies will lose the cash flows from the joint ventures,” said Yale Zhang, an analyst with Automotive Foresight Co. in Shanghai. “Foreign carmakers will be happy as they won’t have to share 50 percent of the profits with their Chinese partners.”

Shares in German carmakers all gained on the news, reversing earlier losses. China accounts for about half of Volkswagen’s namesake brand sales, while the world’s biggest car market is also the most significant buyer of luxury Mercedes, VW’s Audi unit and BMW vehicles. Volkswagen rose as much as 0.9 percent to 173.48 euros. Both BMW and Mercedes-maker Daimler rose about 0.5 percent.

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