Regulation to cap sales of fossil-fuel cars, boost NEVs

China on Thursday took a significant step forward in phasing out fossil-fuel passenger cars and boosting new-energy vehicles (NEVs), issuing a regulation that requires carmakers to sell a minimum number of NEVs.

The Ministry of Industry and Information Technology (MIIT) officially launched a so-called dual credit program that both put a cap on fossil-fuel consumption and imposed minimum sales for NEVs. The program will take effect on April 1, 2018, the ministry said in a document.

Carmakers that produce or import 30,000 vehicles or more a year are required to gradually increase sales of NEVs starting in 2019, according to the document. NEVs must account for 10 percent of a company’s total sales in 2019 and 12 percent in 2020, it said. The MIIT will determine new ratios for after 2020.

The NEV credit system will be applied to carmakers that produce or import less than 30,000 vehicles, but all carmakers will be assessed on their fuel-economy performance with relation to national standards.

Fuel-economy credits can be used by the same company in the following year or transferred among related companies, while credits for NEVs could be traded freely, it said.

The move represent the latest effort by the Chinese government to boost the NEV sector, which the country considers a strategic industry. It also takes China a step closer to phasing out traditional fuel cars.

China has offered heavy subsidies for NEVs’ development. It has also indicated that it is studying a timetable to stop the production of fossil-fuel cars.