China’s New Rules Will Punish Automakers Who Don’t Meet Electric Quota

NOV 15 2018 BY MARK KANE 26

Manufacturers need to comply with quotas in 2019.

China has skipped its 8% New Energy Vehicle (NEV) credits quotas, but in 2019 and 2020 it will require all manufacturers that produce and sell more than 30,000 cars annually to get respectively 10% and 12% in New Energy Vehicle credits.

The new requirements don’t mean that each manufacturer needs to sell 10% plug-in cars, because from a single sale of a New Energy Vehicle a manufacturer can get from 2 to 6 credits.

The number of credits per plug-in car (all-electric, plug-in hybrid or hydrogen fuel cell) depends on various criteria like all-electric range, efficiency and others. The base PHEV needs to have at least 50 km (31 miles of range), while the base EV at least 100 km (62 miles) of range and top speed of 100 km/h (62 mph).

The credit formula is: range multiplied by 0.012 + 0.8 (which gives 2 in case of 100 km BEV). Then you multiply the score by other factors from 0.5 to 1.2 like energy consumption and weight. The resulting cap is 6. We assume that in the future the formula will be evolving, forcing automakers to improve the cars.

Assuming that a manufacturer will sell plug-ins for 2 credits each, it will need to electrify at least 5% of its volume. If the company manages to get the maximum of 6 credits per car, then only about 1.7% of the volume will need to be electrified in 2019.

For example, for every 100,000 cars sold, the company needs to get 10,000 NEV credits in 2019, which translates to 1,700-5,000 plug-ins that fulfill the requirements.

Otherwise, credits will need to be purchased from others (that have an abundance of credits like BYD, Tesla or NIO). If the manufacturer does not gather enough credits, then the Chinese government envisions sanctions.

According to Bloomberg’s article, Ford is one of the companies with the lowest share of plug-ins and could be hit relatively hard.

There are plenty of carmakers in China that exceed the requirements, so we assume that the new rules are directed towards those who still haven’t introduced any plug-ins.

Source: Bloomberg

Categories: China

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26 Comments on "China’s New Rules Will Punish Automakers Who Don’t Meet Electric Quota"

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Ford is lagging again. It seems that Ford is losing market shares and behind the platform revamp everywhere in the world. The only thing that is saving Ford from collapsing is its F-series and Crossovers in the US.

If only some company would start making electric pickup trucks to give them a giant kick in the butt (and the nuts)…

Stand by..


Rivian….Tesla… Workhorse…or some Chinese start up… as long as it is in large quantities taking away the business from the old guard then I’m happy. It is getting there…


Meh. I’m not sure an EV pickup is really going to be a hot commodity. It’s a weird counter culture of people that drive trucks. Can a high end, high performance, high cost truck make some sales as a niche product? Sure. Should mainstream truck makers be worried? Not yet.

I think that there’s a sub-segment that will go for a pure battery pickup, but a majority will have to be brought in with a PHEV that originally is sold to “manly” construction businesses to legitimize it. GM has the parts but refuses to put them together.

The good news is that American buyers are responding well to being forced from V-8s and 6s into big turbo 4s, which means they can deal with a 4-cylinder running a generator. Though I’d rather someone came up with an engine so compact that it can be moved under the bed.


I think US should adopt similar requirement and add limitation on how much credits can be transferred. Each should only get a 3 years windows. Within that window, credits can be bought for compliance. Outside that windows, penalty and fines should be applied.

This is big. China will push ahead the rest of the world, simply too big to ignore.

1.7% seems pretty low but there is definitely panic in boardrooms. VW has to deliver at least 75,000 long range EVs in 2019 from pretty much nothing, GM roughly the same. Fun times.

I wonder,, is there any chance the big autocompanies can or will make this giant EV leap in 2019?

EVs had 5.2% share in September. If each got 2 credits that’s more than enough. Many got more than 2, of course, but there must be a lot that don’t qualify for any credits yet. 50 km minimum for PHEV is a high bar, even using something like NEDC.

50 km is not much using NEDC. It might not even be 20 miles EPA. Let’s hope they soon will use WLTP and also increase it to 70-80 km.

It’s not just EV but PHEV. So I think VW will manage.

No, these numbers are for 6 credits per car, if they use PHEVs for compliance, a lot more cars are required.

GM is on track to deliver ~20,000 Bajoun E100 this year. And are introducing an improved E200 for 2019, plus the Velite 6 PHEV and BEV.

China is on one hand pushing EV’s which is great, and on the other hand, the state tobacco company will manufacture 6 BILLION cigarettes in China this year. I guess all those electric vehicles come with ash trays instead of cup holders.

4 cigarretts per person per year in China. Less if they export.

“During 2017, about 249 billion cigarettes were sold in the United States”

China is close to 4% plug ins for the last couple of months. So well on track to actually be ahead of the credit system for 2019.

5.2% in September according to an article here. I don’t think all have enough range, though. And imports like Tesla get zero credits thanks to China’s blatant trade rule violations.

All of them have enough range. Those 5,2% only count NEVs. And the specification to be counted as NEV already includes the >50 km PHEV range and >100 km BEV range.

If they didn’t have the range or speed to be classified as NEV then they would be one of those 1,5-2 million per year LSEVs that are also sold in the country.

So they have a bare minimum of 4%*2 + 1%*1 = 9% credits since the BEV to PHEV ration is about 4:1. Lots of long range BEVs though so the average is probably closer to 3-4 credits per BEV or 13-17% credits. For the month that is, for the whole year of 2018 somewhere around 10-13% credits.

So they are ahead of schedule…but not all automakers are there of course and the price for credits might be expensive for the laggards. 😉

China is famous for copying stuff and it looks like even its ZEV mandate was copied from the CARB states. I wonder if like California there is also extra credits for using hydrogen rather than batteries to get the same result?

You are misinformed. There are no fast-fueling extra credits for hydrogen FCVs in California for a couple of years already. The amount of CARB credits for both BEVs and HFCVs is based on the range of the vehicle and nothing else.