PSA Autos: Time to Panic about China EV Sales Quota? – Automakers Hope for Less Stringent Rules
The German newspaper the Frankfurter Allgemeine Zeitung (FAZ) reported on Tuesday August 29th that China’s regulators will soon release some final, softened rules regarding 2018 sales quotas for electric vehicles (EVs). The currently-known draft outlines that OEMs have to generate ‘green credits’ equivalent to 8% of their total auto sales in 2018 (10% in 2019, 12% in 2020). For instance, an automaker selling 1mil cars a year in China would need to generate 80,000 credits; credit points are higher for pure EVs and for longer EV driving ranges, and lower for PHEVs and short EV distances. One EV / PHEV sale can generate between two and five credit points, which means that an automaker selling 1mil cars would face a 2018 sales quota of between 16,000 and 40,000 EVs / PHEVs. This is a lot, considering that EV / PHEV sales are almost non-existent among most foreign brands.
If automakers fail to accumulate these credits, they face fines and penalties, such as production cuts for their ICE cars, or having to buy credits from competitors. According to undisclosed sources quoted by the FAZ, the updated system will be more flexible than initially decreed. While it is unclear what the ‘milder’ form of quotas will look like, we expect to see more moderate penalties, or perhaps even a postponement of the law’s enforcement.
Although the Germans believe they have been the driving force behind the review of the rules (Chancellor Angela Merkel personally intervened), it is more likely that pressure from the Chinese auto industry has led to the alterations to the proposal. The final version of the quota system should be published within the next few days. Automakers are likely to be relieved about this respite, yet in our view they are still set to struggle in coming years, unless the postponement period is expanded.
We Discuss:
- EV / PHEV Plans for global OEMs in China
- The Japanese may not be the worst off
- EV Quotas and the impact on local players
- Further challenges facing all OEMs
Founded in 2009, Pelham Smithers Associates (PSA) provides market intelligence on Asian technology, focusing in particular on Japan. The industries covered by our team of specialists are: consumer electronics, telecomms, pharmaceuticals, internet, electronic parts and materials, automotive technology, retail and capital goods.
PSA produces both company and sector reports. The focus of PSA’s research is to identify winners and losers as new technologies impact the top and bottom lines of corporations. Critical to our research is the clear explanation of how these new technologies work and how they impact companies and industries.
The founding partners have worked closely together for twenty years and the team has more than doubled in size since 2012.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.