September 12, 2017 1:31 am JST

China looks to hit the brakes on fossil-fuel cars

Production, sales bans on the table in world's biggest auto market

SHUNSUKE TABETA, Nikkei staff writer

BEIJING -- The Chinese government plans to set a deadline for ending production and sales of gasoline and diesel vehicles, seeking to accelerate an industry pivot to environmentally friendly cars.

The Ministry of Industry and Information Technology is studying the idea, Vice Minister Xin Guobin said Saturday at an automotive industry forum in Tianjin, citing French and British plans for such bans by 2040. The ministry will likely work with relevant agencies later to develop a road map for China, Xin said.

This is of a piece with the national policy of focusing on so-called new-energy vehicles, mainly electric cars and plug-in hybrids. A government plan for China's auto industry released in April calls for boosting sales of these vehicles from 500,000 last year to 7 million in 2025, nearly double the previous target.

China is weighing a ban on combustion-engine automobiles partly to address serious air pollution problems in such cities as Beijing. It also hopes to give domestic automakers, which struggle to compete against international rivals with a commanding lead in fossil-fuel vehicles, a chance to shine globally with eco-cars.

A senior official at a Chinese auto industry group asserted that government measures to promote environmentally friendly automobiles are not intended to protect domestic carmakers. Despite generous subsidies, new-energy vehicles accounted for less than 2% of Chinese auto sales last year as offerings from such local names as BYD failed to impress.

The government has relaxed rules that had barred foreign automakers from forming more than two joint ventures with local partners, allowing a third for eco-friendly cars in hopes of leveraging their stronger brands. It is also working on production and sales quotas for new-energy vehicles to be implemented next year.

China is the world's largest auto market, with 28 million new vehicles sold last year -- 60% more than in the U.S. Its emphasis on electrics has pushed top automakers to adapt.

Volkswagen and Ford Motor, which vie for market share in China, have each decided to set up third joint ventures in the country. American electric-car specialist Tesla is mulling vehicle production here, while Nissan Motor and Toyota Motor are preparing to ramp up their Chinese electric-car efforts with local production and new models.

The government said in April that it will allow majority foreign ownership of joint auto-manufacturing ventures, aiming to raise the current 50% cap by 2025. Steady progress will likely be needed on this front to ensure that restrictions on combustion-engine vehicles do not turn into a giveaway to Chinese companies.

Asia300

BYD Co. Ltd.

China

Market(Ticker): HKG(1211)
Sector:
Industry:
Consumer Durables
Motor Vehicles
Market cap(USD): 24,715.41M
Shares: 2,728.14M

Nissan Motor Co., Ltd.

Japan

Market(Ticker): TKS(7201)
Sector:
Industry:
Consumer Durables
Motor Vehicles
Market cap(USD): 40,940.42M
Shares: 4,220.71M

Toyota Motor Corp.

Japan

Market(Ticker): TKS(7203)
Sector:
Industry:
Consumer Durables
Motor Vehicles
Market cap(USD): 202,501.07M
Shares: 3,262.99M

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