Au­tomak­ers team up on elec­tric cars

China Daily European Weekly - - Business -

cars at a Dongfeng fa­cil­ity in Hubei prov­ince, which has an an­nual pro­duc­tion ca­pac­ity of 120,000 ve­hi­cles. The first model, a com­pact SUV, will start pro­duc­tion in 2019.

The move came within a week of Ford’s sign­ing of a mem­o­ran­dum of un­der­stand­ing with Zo­tye Au­to­mo­bile to pro­duce elec­tric cars. Volkswagen part­nered with JAC Mo­tors on elec­tric cars in May.

Nis­san said its move is to tap the po­ten­tial of the fast-grow­ing seg­ment in China. Sta­tis­tics from the China As­so­ci­a­tion of Au­to­mo­bile Man­u­fac­tur­ers show that 204,000 elec­tric cars were sold from Jan­uary to July, an in­crease of 33.6 per­cent year-on-year.

While agree­ing on the prospects for the seg­ment in China, Bill Peng, a part­ner at Price­wa­ter­house­Coop­ers’ Strat­egy&, said that a more ur­gent mis­sion of the Re­nault-Nis­san Al­liance’s move is to get pre­pared for the pol­icy that China is set to in­tro­duce to boost sales of new en­ergy cars.

A spokesman for the Min­istry of In­dus­try and In­for­ma­tion Tech­nol­ogy said in late July that the pol­icy would be re­leased soon.

As stip­u­lated in a draft — which is widely be­lieved to vary lit­tle from the fi­nal ver­sion — it de­mands that the cred­its an au­tomaker earns from sell­ing new en­ergy ve­hi­cles should ac­count for 8 per­cent of its to­tal sales in 2018.

One elec­tric car will be cal­cu­lated as two or more units de­pend­ing on a num­ber of fac­tors, in­clud­ing the mileage on one charge, and one plug-in hy­brid will count as two units.

If car­mak­ers fail to do so, they will ei­ther have to buy cred­its from other au­tomak­ers, or will sim­ply face a fine, although the amount has not been stip­u­lated by the au­thor­i­ties.

The task will be­come in­creas­ingly chal­leng­ing, with the per­cent­age grow­ing to 10 per­cent in 2019 and 12 per­cent in 2020, ac­cord­ing to the draft.

“The logic is clear. As those in­ter­na­tional car­mak­ers can­not come up with af­ford­able cars, they cre­ate joint ven­tures in China to pro­duce lower-qual­ity and lower-priced ones to earn the re­quired cred­its,” says Yale Zhang, man­ag­ing di­rec­tor of Shang­haibased con­sult­ing com­pany Au­to­mo­tive Fore­sight.

In Volkswagen’s con­tract with JAC, it is stip­u­lated that Volkswagen will have pri­or­ity if it needs to buy cred­its from the joint ven­ture. Ford and the Re­nault-Nis­san Al­liance did not re­veal whether they have sim­i­lar priv­i­leges.

New joint ven­ture to have pro­duc­tion ca­pac­ity of 120,000 ve­hi­cles an­nu­ally

SONG RONGCHENG / FOR CHINA DAILY

The auto pro­duc­tion line of Dongfeng Mo­tor Group in Wuhan, cap­i­tal of Hubei prov­ince.

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