China To Unveil EV Quota Plans Soon, But To Delay Or Soften Penalties, German Newspaper Reports

The German newspaper Frankfurter Allgemeine Zeitung (FAZ) has reported that policymakers in China will be unveiling the country’s finalized plans for electric and hybrid car quotas within the near future, but that the penalties for non-compliance will be less severe than was first proposed.

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This is highly relevant to those in Germany, of course, as China is the world’s largest auto market and Germany auto manufacturers have been lobbying in recent months to weaken China’s plans for an electric vehicle (EV) quota.

Of course, the finalized plans have yet to actually be revealed — all of the above is simply based on what FAZ has reported. Initially, the plan we reported indicated that “all manufacturers will be required to generate EV credits that equal 8% of sales in 2018, 10% by 2019, and 12% by 2020. The rule applies to both foreign and domestic car makers.”

However, it’s not as simple as it sounds. “The credits are computed based on the level of electrification of the cars produced. Fully electric cars earn more credits than plug-in hybrid cars, for example. Plug-in cars that go further on battery power alone are rewarded with more credits than cars that have more limited electric range.” It seemed before that a fully electric car with at least 400 km of range would be worth 4 credits, a fully electric car with under 400 km of range would get 2 credits, and a plug-in hybrid would get 1 credit, but this area of the proposed law has been vague and is most likely one of the items automakers are trying to massage. (Thanks to José Pontes of EV Volumes for some info on this.)

Reuters provides more: “Earlier this year, China said electric and plug-in hybrid cars should make up at least a fifth of Chinese auto sales by 2025, with a staggered system of quotas beginning in 2018. The rules envisaged harsh penalties for non-compliance, including the cancellation of licenses to sell non-electric cars in China, the world’s largest car market.

“FAZ, without citing sources, said the enforcement of the quotas would be handled with a system of credits which would allow for some flexibility in 2018, a solution which will be ‘satisfactory’ for the German carmakers. In June, Chinese Premier Li Keqiang and German Chancellor Angela Merkel had agreed that concessions would be made, but the ministry later released draft regulations upholding the strict sales quotas.”

So … the takeaway seems to be that we’ll have to wait to see what actually happens. It does appear that China may be willing to diminish its plans, though — for whatever reasons.

If you have more details on how the quota system should work, let us know.

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This article has been updated to add context.