Last September, China circulated proposed rules that would require car companies to sell 8% “new energy vehicles” starting this year. A “new energy vehicle” is defined as one that uses a hybrid, plug-in hybrid, battery electric or fuel cell powertrain. Any company that misses the target would be required to pay a fine or purchase clean energy credits from another company.
The program sounds similar to the rules the California Air Resources Board has crafted and put in place. Those rules are under attack by car companies in the US at present. Automakers in China are also kicking up a fuss about the proposed rules.
Does it seem that most of the time one part of government has no idea what another part is doing? While the Ministry of Industry and Information Technology is pushing for more EVs on one hand, other parts of the government decided to lower the financial incentive program for new energy vehicles by 20%. Sales in January plunged 74%. For 2016, new energy vehicles accounted for only 3% of total sales. Getting that up to 8% is going to take more than a few strokes of a government pen.
“The current proposed NEV quota is indeed too ambitious and early for the industry,” said Robin Zhu, an autos 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.”
Speaking to the press before the opening of the National People’s Congress, Miao Wei, China’s minister of industry and information technology, said his agency is considering either lowering the credit requirement in percentage terms or delaying 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.”
The issue in China is the same as it is every other country — electric cars cost too much for ordinary citizens to afford and there are too few charging stations available. Incentive programs are costing the Chinese government billions and building charging infrastructure will cost billions more. Sadly, wanting more electric cars and having more electric cars are two very different things.