Carmakers feel heat from NEVs

Credit system set for launch in April 2018

China’s plan to increase new-energy vehicle (NEV) sales could put heavy pressure on carmakers that focus on traditional fuel cars, a Chinese expert said on Wednesday.

China plans to implement a “dual credit” program that both caps carmakers fossil-fuel consumption and imposes minimum sales for NEVs starting in April 2018, according to a policy document posted on the website of the Ministry of Industry and Information Technology.

Under the program, which concerns automakers that sell or import a total of 30,000 or more vehicles a year, companies are required to achieve sales of NEVs equivalent to 10 percent of their sales of traditional vehicles in 2019 and 12 percent in 2020.

The regulator will set credit standards for automakers that sell or import 30,000 or more vehicles a year from 2019, it said. If automakers produce negative credits in 2019, they will have to boost their credits in 2020.

Some manufacturers – especially larger ones – have objected to the system because of the pressure it puts them under, domestic newspaper The Beijing News reported on Wednesday.

To reach the credit standard, an automaker that produces 1 million vehicles annually will have to manufacture and sell 25,000 electric vehicles with battery endurance of 250 to 300 kilometers, noted the report.

At present, many joint ventures including FAW-Volkswagen, SAIC Volkswagen and Dongfeng Honda Automobile Co sell a large amount of traditional fuel automobiles but have not yet rolled out NEVs.

Though the new policy may bring difficulties for large automakers, it is not very radical because it is encouraging the manufacturers to make and then sell a certain number of NEVs, Cui Dongshu, secretary-general of the China Passenger Car Association (CPCA), told the Global Times Wednesday.

“The regulation is a crucial booster for China to shift from a huge automobile market to a new market characterized by a rising number of NEVs. Together with the timeline to forbid sales of traditional fuel vehicles, this new policy means that China is taking the lead in the global development trend for passenger vehicles,” he said.

For companies such as BYD Co and Beijing Electric Vehicle Co, the new era will offer opportunities.

In August, sales of NEVs in China reached 53,000 units, up 72 percent year-on-year, data from the CPCA showed in September.