BEI­JING MULLS RE­LAX­ING OUT­PUT QUOTA

In­dus­try feedback shows pro­posed 8pc pro­duc­tion tar­get by 2018 overly am­bi­tious

New Straits Times - - Business World - BEI­JING

CHINA is con­sid­er­ing di­alling back or de­lay­ing pro­posed mea­sures aimed at push­ing car­mak­ers to pro­duce more elec­tric ve­hi­cles, af­ter in­dus­try feedback that the tar­gets are overly am­bi­tious.

Un­der draft rules re­leased in Septem­ber for pub­lic consultation, car­mak­ers will be re­quired to ob­tain a new-en­ergy ve­hi­cle credit score of eight per cent next year, de­rived from dif­fer­ent weight­ings as­signed to var­i­ous types of zero- and low-emis­sion ve­hi­cles.

Com­pa­nies that fail to meet the re­quire­ment face fines or have to buy cred­its from those that ex­ceeded the min­i­mum.

Av­er­age pro­duc­tion of new-en­ergy ve­hi­cles last year might have con­trib­uted only about three per cent of the score re­quired, five per­cent­age points short of the pro­posed 2018 tar­get, said the China As­so­ci­a­tion of Au­to­mo­bile Man­u­fac­tur­ers.

German Econ­omy Min­is­ter Sig­mar Gabriel told German me­dia in Novem­ber that he ex­pressed the view to his Chi­nese coun­ter­part that the 2018 tar­gets were not at­tain­able.

Miao Wei, China’s Min­is­ter of In­dus­try and In­for­ma­tion Tech­nol­ogy, said on Sun­day his min­istry was con­sid­er­ing ei­ther low­er­ing the credit re­quire­ment in per­cent­age terms or de­lay­ing the im­ple­men­ta­tion date.

“We are still work­ing on the reg­u­la­tion,” said Miao at the an­nual ses­sion of the Na­tional Peo­ple’s Congress. “It may be fi­nalised around May or June.”

Elec­tric ve­hi­cle sales plunged in Jan­uary af­ter the gov­ern­ment cut sub­si­dies by more than a fifth start­ing this year, raising the ques­tion of whether the coun­try can sus­tain de­mand for green cars with­out gen­er­ous grants.

Sales of new-en­ergy ve­hi­cles (NEVs), the term China uses to re­fer to bat­tery-elec­tric ve­hi­cles, plug-in hy­brids and fuel-cell cars, dropped 74 per cent in Jan­uary from a year ear­lier to 5,682 units, ac­cord­ing to data re­leased by the auto as­so­ci­a­tion.

“The cur­rent pro­posed NEV quota is in­deed too am­bi­tious and early for the in­dus­try,” said Robin Zhu, an an­a­lyst with San­ford C. Bern­stein in Hong Kong.

“Firstly, most of the NEV models are still in the process of devel­op­ment and se­condly, the mar­ket has not de­vel­oped that big de­mand for NEVs. It is not re­al­is­tic to ask car­mak­ers to sus­pend their sales of com­bus­tion ve­hi­cles so as to be com­pli­ant for the NEV quota.”

A low­er­ing of the credit re­quire­ment or de­lay in im­ple­men­ta­tion could buy more time for car­mak­ers in­clud­ing Volk­swa­gen AG and Gen­eral Mo­tors Co to ex­pand pro­duc­tion of such NEVs.

BLOOMBERG PIC

An at­ten­dant with an elec­tric car at a charg­ing point in Bei­jing. Sales of new-en­ergy ve­hi­cles in China dropped 74 per cent in Jan­uary from a year ear­lier to 5,682 units.

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