Chinese automakers expecting to have head start on international companies
China is planning to raise the ratio of electric cars and plug-in hybrids in carmakers' lineups in coming years, which officials and analysts say will help foster the growth of the burgeoning new energy vehicle industry in the world's largest auto market.
The Ministry of Industry and Information Technology said last week that carmakers in the country will garner credits accounting for 14 percent of their deliveries in 2021, and the figure will grow to 16 percent in 2022 and 18 percent in 2023.
This is part of the amendment of the dual credit policy China promulgated in 2017, which assesses carmakers according to their efforts to cut fuel consumption and to produce new energy vehicles.
Carmakers can amass credits by producing gasoline vehicles with less emissions than the country's standards or by producing electric cars, plug-in hybrids and fuel cell vehicles.
The companies are allowed to offset deficits in gasoline vehicle credits with those accumulated by their sister companies, those from producing new energy vehicles or those bought from others.
When promulgated in 2017, the requirements were 8 percent of a carmaker's vehicle deliveries for 2018, 10 percent for 2019 and 12 percent for 2020.
Back then, a carmaker could earn up to five points for producing an electric vehicle and 2 points for producing a plug-in hybrid. Now they can fetch 3.4 points and 1.6 points, according to the amendment.
Officials at the ministry said the new requirements can basically ensure that by 2025 passenger vehicles' average fuel consumption will fall to 4.0 liters per 100 km and new energy vehicles will account for 20 percent of total vehicles in the year.
They said since the adoption of the dual credit policy, carmakers have increased their investment in research and development, rolled out more new energy vehicles and improved passenger vehicle fuel efficiency.
Statistics show that average fuel consumption stood at 5.5 liters per 100 km in 2019, down 10 percent from 2016. New energy vehicle sales in the year totaled 1.06 million, ranking first globally for five years in a row.
Thomas Fang, a partner in the China office of global consulting firm Roland Berger, said the ratio increase is gradual, which is a good continuation of the current policy, and its emphasis on efforts to cut power consumption will help support competent carmakers.
The revisions have allowed vehicles with lower power consumption to earn more points than before, he said.
Cui Dongshu, secretary-general of the China Passenger Car Association, said China's new energy vehicle sector, which has seen sales fall since the second half of 2019, will see a rise in 2021 thanks to the amendment.
Analysts say international carmakers may have to work harder to meet the requirements than Chinese brands, which have a few years' head start producing electric cars.
Volkswagen AG, the most popular international carmaker in China, said it will promote the development of the new energy vehicle market together with its Chinese partners.
The German carmaker sells more than 4 million vehicles a year in China, which means it must garner 560,000 points by selling at least 160,000 electric cars a year in 2021.
It will be a difficult task to finish because it will take at least months this year to roll out its first locally made electric model, the ID 3, at its joint venture SAIC Volkswagen.
Stephan Wollenstein, CEO of Volkswagen Group China, said the carmaker is expecting to sell 1.5 million new energy vehicles a year in the country by 2025.
Volkswagen is acquiring 26 percent of electric vehicle battery maker Gotion High-Tech for around 1 billion euros (US$1.12 billion), to become its largest shareholder.
GM, another best-selling carmaker in China, did not comment on the new credit requirements by press time.
But in an interview earlier this year, GM China CEO Julian Blissett said the automaker would introduce its new electric vehicle platform into China and work with more local suppliers in the production of electric vehicle parts.
The US automaker aims to have 20 new energy vehicle models available to Chinese consumers by 2023.
According to statistics released by the Ministry of Industry and Information Technology last year, 75 out of 141 passenger carmakers operating in China did not meet the country's standards in 2018.
Most of those who failed were international carmakers or their joint ventures in the country, including SAIC GM, Beijing Hyundai, Changan Ford and FAW Toyota.
Editor:Cherie
