CHONGQING -- Automakers will need to ensure that electric, hybrid and fuel cell models constitute 10% of sales volume in 2019 or buy credits to cover the shortfall under a new scheme announced Thursday by the Chinese government.
The quota will apply to automakers that produce in China an annual 30,000 passenger cars. Importers that sell 30,000 or more passenger cars here will also need to comply.
This requirement will rise to 12% in 2020. An 8% quota for 2018 mentioned in an earlier draft has been dropped after manufacturers in Japan, the U.S. and Europe, as well as such parties as the German government, had urged a delay in implementation on the grounds that electric vehicles would not be sufficiently developed by then.
Companies that do not meet the quota must purchase new-energy-vehicle credits from those exceeding the required level. Selling off these credits will give makers of primarily new-energy vehicles money to develop new models and enhance production and sales.
Some expect that companies not fulfilling the quota on their own could also face limits on production and imports the following year. But some leniency will be offered in the program's infancy: Those falling short in 2019 will be able to make up the difference in 2020.
The central government has offered subsidies of up to 60,000 yuan ($9,000) for purchases of new-energy passenger cars at one point -- and much more for new-energy commercial vehicles. But sales volume for these vehicles totaled just 500,000 units in 2016 -- less than 2% of China's overall vehicle sales.
Plans now are to put the onus on manufacturers to push these Earth-friendly autos. Through quotas and other measures, China aims to have new-energy vehicles make up 20% of the 35 million new vehicles expected to be sold in 2025.
Foreign automakers will also be allowed to form up to three carmaking joint ventures with Chinese companies, up from two, to stoke production of new-energy vehicles here. The government is even considering letting foreign companies make the vehicles in China without teaming up with a local partner as currently required.
Ford Motor of the U.S. and Germany's Volkswagen have already reached agreements to form their third joint ventures here. American electric-car upstart Tesla is also thinking about building in this country. As the world's largest car market charges up its new-energy-vehicle efforts, automakers across the globe are set to plug in as well.