Sales of New Energy Vehicles in China - 2016

Sales of New Energy Vehicles in China - 2016

While we never thought it was possible to be too aggressive with legislating EV adoption, China may have done just that.

Specifically, the Chinese requirements of 8% of light vehicles produced in China to be New Energy Vehicles (all-electric or plug-in hybrids) for 2018 has encountered some resistance.

While very commendable, the plan seems to be too ambitious for the realm of possibilities for local automakers, especially considering the quotas continue to move up every year - to 10% in 2019, and 12% in 2020.  That is a lot of cars, and a lot of production infrastructure to be implemented in a very short time.

BMW 530e iPerformance charging

BMW 530e iPerformance charging

According to Handelsblatt, Chancellor Angela Merkel recently talked with Chinese Premier Li Keqiang about the issue in a telephone conversation. Germany even send high-level delegation to Beijing "for talks on a compromise".

For German carmakers, the requirements are apparently too difficult at this stage of the market. Chinese manufacturers also seems to be dubious.

"German automakers complained the quotas would put them at a competitive disadvantage in China because they couldn’t meet the targets so quickly. The Chinese automobile industry association CAAM had also warned Beijing that some Chinese automakers couldn’t meet the quotas that fast."

As a result, China has decided to relax the quotas in some manner, which would be smart if NEVs sales continue to decrease.  While the future percentages for plug-in cars sales are not yet known, the 2018 targets are now likely to be delayed until 2019.

source: Handelsblatt