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China aims for big raise in 2020 ZEVs mandate

Goal for 12% of new cars to be ZEVs by 2020 worries automakers

As more and more countries ramp up their mandates for zero-emissions vehicle (ZEV) sales over the next decade, China has devised a particularly bold 4-year plan. The Ministry of Industry and Information Technology has drafted a new legislation which would require 8% of new car sales to be ZEVs by 2018, rising to 12% by 2020.

When compared with California’s current mandate of 4.5% of sales being ZEVs by 2018, or Quebec’s of 3.4% by 2018 and 6.9% by 2020, China’s represents the most ambitious plan so far.

Feathers have already been ruffled amongst automakers following the news, particularly as China is now the world’s largest auto market and has drawn enormous amounts of investment.

The industry panic echoes that of two weeks ago, when manufacturers lobbied hard against California’s plans to increase their already-significant mandate. Only Tesla, which only produces ZEVs were in favour of fining companies that fail to meet the mandates. It has often been said that these episodes demonstrate the industry’s true colours; whilst talking a big game about developing marketable EVs in the next few years, most automakers appear reluctant to tie themselves to any firm production commitments. Companies invariably lobby against state-legislated targets.

China itself has good cause to be stepping up its commitment to ZEVs. Pollution has been at record levels; images of cities shrouded by smog are well-documented. The World Health Organisation considers small toxic particles called PM2.5 to be particularly harmful, and that a density of 10 micrograms per cubic metre is the upper bound of non-hazardous air. Bakersfield, CA is the most polluted city in the US with a PM2.5 density of 18.2 µg/m3. China’s most polluted city, Xingtai, has a PM2.5 density of 155.2 µg/m3, nearly eight and half times higher.

In major Chinese cities, buying a ZEV is already highly incentivised, which is indicative of China’s commitment to spreading the vehicles. In order to register a standard combustion engine car in Beijing or Shanghai, one must enter an auction for authorisation in which the highest bidder can register their car. Only one in 700 applicants are successful at each auction.

ZEV owners, however, are exempt and may register without hassle. Those who do not have a registration can still drive their car, but must pay a weekly charge and actively seek registration at the next possible opportunity. The system is punitively bureaucratic, but clearly effective.

 

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Heavy traffic in Beijing

 

Home-grown revolution

Another aim of these mandates, and one which has caused further concern, is for Chinese ZEV manufacturers to have a 70% share of their home market by 2020 as well – bad news for the many new electric or hybrid models made by large, Western auto companies already struggling for a foothold in the market.

Earlier this year, German officials were forced to lobby hard for Hong Kong to increase its incentives for plug-in hybrids, where the ZEV market is an 80:20 split between Tesla and home-grown Chinese manufacturers.

In mainland China the most popular ZEV brands are BYD and Kandi, which command a quarter of the market share between them.
Matthias Wissmann of the German automobile interest group Verband der Automobilindustrie (VDA) stated his hopes for a more open market in the future to Süddeutsche Zeitung: “We are betting that China secures a reliable competitive and fair market access for non-Chinese companies and that non-discriminatory rules will apply” he said. “It is an essential feature of a market economy that environmental rules, regulations or incentives apply to all companies equally, regardless of where they produce or do research”.

Whilst he sounded optimistic, it is clear that he and other lobbyists fear being frozen out of an increasingly important market, and one which is shifting shape faster than they are willing to adapt. German Economy Minister Sigmar Gabriel is currently on a visit to Beijing , and it is no doubt hoped back home that he will clarify the situation and push a more favourable deal for German producers.

 

About Harry Locke

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