September 10th, 2017 by Kyle Field
China’s vice minister of industry and information technology, Xin Guobin, has announced that the Chinese government is currently working on a timeline to end both the production and sales of fossil fuel vehicles. The bold move comes as the government struggles to respond to public outcry in major Chinese cities struggling with crippling air pollution.
The move has yet to be finalized with an official timeline and regulation, but the statement reveals that the Chinese government is looking at fossil fuel vehicles as much more than just a solution to air pollution. Xin noted that Beijing plans to “elevate new energy vehicles to a new strategic level” and that they expect the move to have a significant impact on the environment and the growth of the domestic auto industry.
China is the largest auto market in the world, with more new vehicle sales per year than any other country, making the shift in direction a major turning of the tides in the electrification of personal transportation. The move sees China joining the UK and Francein establishing national goals for the phaseout of internal combustion vehicles. This is a move that is clearly easier said than done. Though, China has more incentive to decarbonize transportation than just a ploy to bolster its green image.
The Chinese government already offers overly generous incentives for the purchase of alternative fuel vehicles. The result is that the prices of plug-in cars are often competitive or even lower than conventional fuel vehicles today. The incentives have come at a cost and have been politically divisive, which is why the country is instead shifting towards a cap-and-trade model. The new model requires automakers to build a percentage of alternative fuel vehicles (“new energy vehicles”) or buy credits from competitors who have an excess of the credits. It’s a program reminiscent of the California Zero Emission Vehicle (ZEV) mandate.
The new model is not a timid one, with a very ambitious mandate of “8%” of all vehicle sales that must be hybrid, plug-in, or electric vehicles for 2018. The goal steps up to “10%” for 2019, followed by another increase to “12%” in 2020. The percentages are in quotes because they aren’t exact percentages where one gas car equals one electric car. A fully electric car with long range (a certain battery size, most likely) will be counted as 4 cars; a fully electric car that doesn’t hit that minimum range/capacity will count as 2 cars; and a plug-in hybrid will count as 1 car. While these goals will not clean up Beijing’s infamous smog overnight, they send a clear message to the citizens and to automotive companies that China is charting a new course forward for its citizenry.
China sees the shift to electrification as an opportunity to define the global plug-in vehicle market and has already become a hotbed of development, with numerous manufacturers clamoring for footholds in the emerging Chinese plug-in vehicle market. Honda, Nio, and Volkswagen are all pushing forward into the emerging market with plans to release new production EVs in China next year. BYD has also established itself as an early leader in the market. It leads Chinese electric car sales thanks to several consumer models that are already quite popular in the country, supported by an ever-growing suite of fleet offerings.
The move will also help China to cut oil imports, which are a constant drag on its economy. Shifting money flowing out of the country for fuel imports to domestic renewable electricity generation only makes the deal that much sweeter.