China continues it push on electromobility; EVs to account for 25% of annual new LCV sales in 2025

Despite the continuous drop in sales of electrified vehicles after the subsidy cut in June, Beijing continued its push on the automakers towards building more electric vehicles. The message was conveyed in the draft “development” plan of the Ministry of Industry and Information Technology for the domestic electrified vehicle industry covering 2021-35.

Under the plan, the ministry, which regulates the domestic auto industry, expects EVs to account for 25 percent of annual new light-vehicle sales in 2025, up from the 20 percent target it set in a similar plan in 2017.

The ministry expects EVs to account for 25% of annual new light-vehicle sales in 2025, up from the earlier target of 20%.  The target would be a giant leap from the current share of electrified vehicles in China. In the first ten months of 2019, the share stood at 4.6 per cent. Beijing plans to wind down the subsidies for EVs by the end of 2020, which has been already cut by more than 60 per cent.

The Ministry of Industry and Information Technology planned some measures to achieve the EV target for 2025.  It pledges to maintain a sales tax exemption and provide preferential financing and traffic management policies for             EVs.  It will also encourage provincial governments to support the use of electrified vehicles by public transport operators and new mobility service providers.

The most significant measure in the draft plan will be the efforts at “optimizing” the carbon credit program, under which, passenger vehicle makers must earn one carbon credit for every 100 vehicles they produce. The program requires carmakers to earn an amount of credits equivalent to 10 percent of their annual output in 2019, which will be increased to 12 per cent next year.

The ministry didn’t specify how to “optimize” the carbon credit program; however, carbon credit requirements will be raised after 2020. It is to be noted that the primary electrified vehicle producers in China are all domestic companies and they have an upper hand on global brands on carbon credit program, which are still struggling with the steady sales drop in China market.