Manufacturing News

China may roll back EV quotas as industry pushes back

China may ease proposed quotas aimed at producing more electric vehicles as Beijing gets pushback from the auto industry over the scale and pace of the plans.

The proposed changes would delay the target date when electric cars and plug-in hybrids must account for at least 8 percent of an automaker's sales.

Under the proposed changes, automakers would have to attain that target in 2019, two auto executives said.

The original target year was 2018, according to a draft policy released in September. The original draft also requires EVs and plug-in hybrids to rise to 10 percent of an automaker's sales in 2019 and 12 percent in 2020.

Nothing set in stone
Any loosening of the targets would mark a pullback by Beijing, which has faced opposition to its planned targets.

Automakers and industry associations have said the targets are too tough. Last year, sales of EVs and plug-in hybrids accounted for just 1.8 percent of sales in China.

"It's normal to make revisions as it's a draft plan," said An Jin, chairman of Anhui Jianghuai Automobile Group, or JAC Motor, on the sidelines of the National People's Congress in Beijing.

He said he was aware of talks to revise the quota targets, but said nothing was set in stone. "JAC hasn't been told what revisions might be made to the draft, but I think it is possible the draft will be changed after the discussions," he said.

"Whether the whole market can hit this quota by 2018 depends a lot on the strength of government policy. If it's strong then we should be able to surpass the targets," An said, But "if you consider China's infrastructure and the transformation of China's auto sector, then perhaps the pace will have to slow."

Considering options
Two executives familiar with the plans told Reuters the government was considering options for lowering the requirements.

One idea was to reduce the quota requirement by 2 percentage points each year, cutting the 2018 requirement to 6 percent, said a China-based government relations official at a major global automaker. It would then be 8 percent in 2019 and 10 percent in 2020.

Another option would be to push back each target by a year, with the 8 percent quota starting from 2019, an executive at a Japanese carmaker said.

Both asked not to be named because of the sensitivity of the matter and because the draft was still under consideration.

The overall policy includes quotas for EVs and plug-in hybrids, targets for average fuel economy requirements and a credit trading system to promote electrified vehicles while penalizing gasoline-powered vehicles.

Conflicting approaches
The two people said the quota dispute was tied to a disagreement between the Ministry of Industry and Information Technology and China's top state planner, the National Development and Reform Commission.

The Ministry of Industry and Information Technology, which regulates manufacturers, supports a more flexible credit trading system favored by automakers. The National Development and Reform Commission is more aggressive in promoting a transition to EVs, pushing the introduction of the stricter quotas.

A National Development and Reform Commission spokesman said the body played a "small role" when the draft was open to the public for discussion. The Ministry of Industry and Information Technology did not immediately respond to Reuters' requests for comment.

China has subsidized electrified vehicles, but is gradually swapping out incentives for sales targets that automakers must meet. The central government cut subsidies 20 percent this year.

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