China shifts automotive strategy to lighten controls on fuel-efficient hybrids

July 17, 2019

The Chinese government’s Ministry of Industry and Information Technology, which oversees automotive policy, is reported to have plans to amend its automotive strategy to lighten controls on fuel-efficient hybrid vehicles compared with gasoline or diesel vehicles, according to Nikkei Asian Review. Under current regulations, hybrid vehicles are grouped with conventional gasoline vehicles. If the amendment goes ahead, they would still be considered fossil-fuel-powered but reclassified as ‘low-fuel-consumption passenger vehicles.’ 

Automakers are currently required to produce 20,000 high-performance electric vehicles for every 1 million hybrids they produce, under a point-based quota system. Under the newly-proposed regulations, automakers would need to produce only 6,000 electric vehicles per million hybrids, while the requirement for gasoline vehicles would rise to 29,000 for every 1 million gasoline vehicles. 

The new development is expected to be especially beneficial for Japanese automakers Toyota Motor and Honda Motor, who together sold more than 2 million hybrids worldwide in 2018, accounting for the vast majority of the 2.29 million produced that year, according to IHS Markit. Hybrid sales are said to have accounted for just over 10% of the nearly 1.49 million vehicles sold in China by Toyota in 2018; the automaker now aims to boost this to above 30% by 2020. 

The proposed amendments to the regulations also includes measures to promote hydrogen fuel cell vehicles. Toyota has recently been partnering with a number of Chinese companies, including Beijing Automotive Group, in the development of such vehicles. 

Further, the proposed amendments would allow automakers that beat the quota in one year carry over points to the following year under certain conditions. The government plans to continue increasing the quota, which will rise to 12% in 2020 and by two percentage points each year between 2021 and 2023.

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