Manufacturing News

China may ease or delay EV production quotas

China may ease or delay proposed measures intended to push automakers to produce more electric vehicles, after industry complaints that the targets are overly ambitious.

Under draft rules released in September, automakers must obtain an EV credit score of 8 percent next year, derived from different values assigned to various types of zero- and low-emission vehicles.

Companies that fail to meet the requirement would be fined or required to buy credits from companies that exceeded their targets.

Industry production of EVs and hybrids last year generated only 3 percent of the score required, well short of the proposed 2018 target, according to the China Association of Automobile Manufacturers.

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

Miao Wei, China's minister of industry and information technology, told Bloomberg News on Sunday that his ministry is considering proposals to lower EV production targets or delay the implementation date.

"We are still working on the regulation," Miao said on the sidelines of the opening of the annual session of the National People's Congress. "It may be finalized around May or June."

EV sales plunged in China in January after the government cut subsidies by more than a fifth starting this year, raising the question whether the country can sustain EV demand without generous grants.

'Too ambitious'
Sales of battery-electric vehicles, plug-in hybrids and fuel cell powered cars dropped 74 percent in January from a year earlier to 5,682 units, according to the auto association.

"The current proposed EV quota is indeed too ambitious and early for the industry," said Robin Zhu, an autos analyst with Sanford C. Bernstein in Hong Kong. "It is not realistic to ask carmakers to suspend their sales of combustion vehicles so as to be compliant for the EV quota."

Lower production targets or delayed implementation could buy more time for automakers to expand production of such vehicles.

"We are glad to hear that our proposal is under consideration by Minister Miao," said Xu Yanhua, deputy secretary-general of the China Association of Automobile Manufacturers. "But that does not mean it will be finalized in this way. This is a good development. At least it is being considered."

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