China on the road to eliminating fossil fuel vehicles

China is home to half the world's total of new-energy vehicles, with more than a million currently on its roads. A new national smart cars strategy promises banning production and sale of fossil fuel-based vehicles in the near future.

BYD Taxi
A BYD e6 all-electric taxi in Shenzhen, China. A unit of battery maker BYD Ltd, BYD Auto is the world’s biggest electric vehicle maker by number of units sold. Image: Brücke-Osteuropa, CC0, via Wikimedia Commons

China is working on a national smart cars strategy and is considering a ban on the production and sale of fossil-fuel vehicles, according to policy-makers at a forum on automotive industry development.

It joins Britain and France in looking to end the production of vehicles using diesel or gasoline.

The global auto industry is leaning toward intelligent and electric vehicles, Xin Guobin, vice industry minister, told the forum in Tianjin.

He said automakers should have a thorough understanding of the situation and readjust their strategies. The ministry will work out the timetable, Xin said.

China plans to “elevate new-energy vehicles to a new strategic level,” he said.

Last year, China passed the United States as the biggest electric car market.

Producing and selling more than 28 million vehicles in 2016, the eighth year it was the world’s biggest market, China’s auto industry contributed at least a 10th of total retail sales of consumer goods.

China plans to elevate new-energy vehicles to a new strategic level.

Xin Guobin, vice minister, Ministry of Industry and Information Technology

It is also the largest producer of and market for new-energy vehicles, with more than 500,000 built and sold last year. There are more than a million new-energy vehicles on China’s roads, or half the world’s total.

To encourage the development of new-energy vehicles, subsidies of as much as half the original price are available, but in the long term such subsidies may lead to blind expansion, said Song Qiuling, a deputy section chief from the Ministry of Finance.

Subsidies will gradually be reduced and a new-energy credit policy introduced, Song said.

China has supported electric development with billions of dollars in research subsidies and incentives to buyers, but is switching to a quota system that will shift the financial burden to manufacturers.

Under the proposed quotas, electric and hybrid gasoline-electric vehicles would have to make up 8 per cent of each maker’s output next year, 10 per cent in 2019 and 12 per cent in 2020. Automakers failing to meet their target could buy credits from competitors that have a surplus.

Xin said the period up to 2025 will be critical for the auto industry. Energy-saving and emission reduction requirements are increasing, the development of new-energy vehicles is becoming more technically demanding and intelligent vehicles are expected to have a profound effect on the industry.

The government has ordered state-owned Chinese power companies to speed up installation of charging stations to increase the appeal of electrics.

Chinese automaker BYD Auto, a unit of battery maker BYD Ltd, is the world’s biggest electric vehicle maker by number of units sold. It sells gasoline-electric hybrid sedans and SUVs in China and markets all-electric taxis and buses in the US, Europe and Latin America.

Volvo Cars, owned by China’s Geely Holding Group, announced plans this year to make electric cars in China for global sale starting in 2019.

General Motors, Volkswagen and Nissan have said they are launching or looking at joint ventures with Chinese partners to develop and manufacture electric vehicles in China.

In July, France and Britain said sales of gasoline and diesel vehicles would cease by 2040 as part of efforts to reduce pollution and carbon emissions.

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