China, New Energy Vehicle Policy Report - Enviliance ASIA

The New Energy Vehicle (NEV) industry has been rapidly developing thanks to their significant contributions towards alleviating the energy crisis and environmental governance issues, which are becoming more important as the world works towards achieving the Dual-Carbon targets. NEVs utilize newer drive systems where the power to move the vehicle is generated completely or primarily from new energies. Definitions of NEVs in various Chinese policies and plans include pure electric vehicles, plug-in hybrid vehicles, and Fuel Cell Electric Vehicles (FCEVs).

Jixin Auto contains other products and information you need, so please check it out.

Research into electric vehicles, FCEVs, hydrogen energy and similar began in the s in China. The first domestic electric vehicle was approved for sale in November and entered production, causing the NEV industry in China to blossom. In June the State Council issued the Plan for Energy Conservation and NEV Industry Development (-). The Plan declares that major strategies for NEV development and the transformation of the automobile industry must focus on pure EVs, clarifies the technology roadmap required to achieve this, and sets out industrialization targets to be met by .

Numerous policies encouraging and supporting NEV development have sparked a rapidly developing NEV industry in China. According to statistics from the CMIF, 7.058 million NEVs were manufactured and 6.887 million NEVs were sold in China in , which is a YoY growth of more than 90%. Data published by the General Administration of Customs, 6.79 million NEVs were exported from China in , up 120% YoY. In recent years, the Chinese government has acted consistently to safely steer the industry’s growth in a stable, healthy direction with a range of supportive policies designed to achieve goals such as increasing proactiveness in the NEV market, expanding the range of use of NEVs, and improving NEV support services.

1. Major NEV Industry Policies, Regulations and Standards released for the 14th Five-Year Plan

A summary of all major new NEV industry policies, regulations and standards issued by the Chinese Government during the 14th Five-Year Plan can be found below.

Table 1   Major 14th Five-Year Plan NEV Industry Policies at a Glance

Document Name Issue Date Issuing Authority Implementation Opinions on Accelerating Charging Infrastructure Construction to better support the Introduction of NEVs in and Revitalizing Rural Areas 5/14/ NDRC
National Energy Administration Notice on Revisions to the Interim Measures for the Management of Energy Conservation and Emissions Reduction Subsidy Funds 4/07/ Ministry of Finance Notice on Organizing and Executing Pilot Zone Tasks for the Comprehensive Electrification of Public Domain Vehicles 1/30/ Ministry of Industry and Information Technology
Ministry of Transport
…and 6 other Departments Opinions on Supporting Railway Transportation Services for New Energy Vehicle Products to Support New Energy Vehicle Manufacturing 1/03/ National Railway Administration
Ministry of Industry and Information Technology
China State Railway Group Company, Ltd. Road Motor Vehicle Production Enterprises and Products (363rd Ed.), Catalog of Vehicle Models recommended for New Energy Vehicle Promotion and Application (10th Ed., ), Catalog of NEV Models to Save Energy and Enjoy Preferential Vehicle and Vessel Tax Reductions (404th Ed.), Catalog of NEV Models exempt from Vehicle Purchase Tax (60th Ed.) 11/09/ Ministry of Industry and Information Technology Announcement on Extending the Vehicle Purchase Tax Exemption for NEVs 9/18/ Ministry of Finance
State Taxation Administration
Ministry of Industry and Information Technology Action Plan to Accelerate Expressway Charging Infrastructure Construction 8/01/ Ministry of Transport
National Energy Administration
…and 2 other Departments Implementation Plan for Peak Carbon Emissions in the Industrial Domain 7/07/ Ministry of Industry and Information Technology
NDRC
Ministry of Ecology and Environment Notice on Measures to Invigorate Automobile Circulation and Boost Automobile Consumption 7/05/ Ministry of Commerce
NDRC
…and 15 other Ministries and Commissions Notice on Policy for the Extended Application of NEV Financial Subsidies 12/31/ Ministry of Finance
Ministry of Industry and Information Technology
…and 2 other Departments Notice on the Distribution of the Plan for NEV Industry Development (-) 10/20/ General Office of the State Council

1.1 The 14th Five-Year Plan: Major Targets and Tasks

In October the General Office of the State Council issued the Plan for NEV Industry Development (-), which gave a comprehensive overview of NEV development pathways from the 13th Five-Year Plan through to the 15th Five-Year Plan. The Ministry of Industry and Information Technology, NDRC and Ministry of Ecology and Environment then jointly issued the Implementation Plan for Peak Carbon Emissions in the Industrial Domain in July , declaring the NEV industry a key developing carbon emissions industry and setting out key tasks necessary to achieve Peak Carbon Emissions targets.

Major Targets

By :

• Reduce average energy consumption for new pure EV passenger vehicles to 12kWh/100km
• NEV sales volume for new cars to reach approx. 20% of the sales volume for new conventional cars
• Create commercial applications for self-driving vehicles in restricted areas and specific scenarios
• Improve the convenience of vehicle charging and battery swapping services

By :

• New and clean energy vehicles to comprise approx. 40% of all transport vehicles
• Decrease carbon emissions intensity for passengers and commercial vehicles by 25% and 20% of levels

By :

• Pure EV new car sales volume to comprise the largest market share
• All public domain vehicles to be fully electric
• Have commercial applications for FCEVs
• Have successfully scaled up self-driving vehicle applications
• The vehicle charging and battery swapping service network should be more efficient
• Have achieved stable progression in the field of hydrogen fuel supply system

Major Tasks

Increase Technological Innovation.

• Speed up the construction of generic technological innovation platforms;
• Increase industry capacity for public services.

Construct a New Industry Ecosystem.

• Create a supportive ecosystem to guide business development;
• Drive the innovative application of key systems;
• Increase the level of smart production;
• Strengthen quality safety guarantees.

Drive Cross-Industry Development.

• Drive cross-industry development between the NEV, energy, transportation, and information and telecommunication industries.

Improve Infrastructure Systems.

• Vigorously promote vehicle charging and battery swapping network construction;
• Assist in promoting the construction of a smart road network;
• Steadily proceed with the construction of the hydrogen fuel supply system network.

1.2 Mobilize the Main NEV Market Players

In recent years, the government has used constant policy adjustments to maintain a quality level of constant growth in the NEV market. saw the introduction of a mechanism to reduce government financial subsidies. Certain subsidies for pure EV passenger vehicles with low range were gradually reduced to zero beginning in , and subsidies offered for the remaining subsidized models of pure EV passenger vehicles with ranges under 300Km were completely removed in .

• Ministry of Finance, Ministry of Industry and Information Technology, Ministry of Science and Technology, NDRC Notice on Policy for the Extended Application of NEV Financial Subsidies (31 December, )
  The Notice requires that the standard NEV subsidy be 30% lower in than ; and that standard subsidies provided to eligible vehicles in the fields of public transport, long-distance buses, car rentals (including ridesharing), sanitation, urban logistics, postal and courier deliveries, civil airports and official party organizations be 20% lower than . The Notice also clarifies that NEV vehicles registered after 31 December, will no longer be subsidized.
• Ministry of Commerce Notice on Measures to Invigorate Automobile Circulation and Boost Automobile Consumption (July 5, )
  The Notice demands that the purchase and use of NEVs is supported, that free intra-regional circulation of NEVs is facilitated, that regional NEV market protections are removed, that regions be prohibited from establishing NEV model catalogs, and that unreasonable vehicle parameters and indices must not be applied to NEV product sales and consumer subsidies.
• Ministry of Finance, State Taxation Administration, Ministry of Industry and Information Technology Announcement on the Continuation of the Vehicle Purchase Tax Exemption Policy for New Energy Vehicles (September 18, )
  As per the Announcement, all NEVs added to the Catalog of Models of New Energy Vehicles Exempt from Vehicle Purchase Tax before December 31, and all NEVs purchased between January 1, and December 31, are exempt from Vehicle Purchase Tax.
  The Catalog of Vehicle Models recommended for New Energy Vehicle Promotion and Application (10th Ed., ) was released in November by the Ministry of Industry and Information Technology together with the State Taxation Administration-approved Catalog of NEV Models to Save Energy and Enjoy Preferential Vehicle and Vessel Tax Reductions (44th Ed.) and the Catalog of NEV Models Exempt from Vehicle Purchase Tax (60th Ed.).
• Ministry of Finance Notice on Revisions to the Interim Measures for the Management of Energy Conservation and Emissions Reduction Subsidy Funds        (April 7, )
  The Notice makes several revisions to the provisions of the Interim Measures for the Management of Energy Conservation and Emissions Reduction Subsidy Funds (FSDC () No. 10), including the revision of ‘implementation deadline of ’ to ‘by ’, and
  ‘Key Support Scope for Energy Conservation and Emissions Reduction Subsidy Funds’ to ‘(1) Liquidation of NEV Promotion and Application Subsidy Fund; (2) Liquidation of Charging Infrastructure Reimbursement; (3) Demonstration Application of Fuel Cell Electric Vehicles; (4) Liquidation of Circular Economy Pilot Demonstration Items; (5) Provincial Energy Conservation and Carbon Reduction Pilots; (6) Relevant Payments requiring State Council Approval’.
• NDRC, National Energy Administration Implementation Opinions on Accelerating Charging Infrastructure Construction to better support the Introduction of NEVs in and Revitalizing Rural Areas (May 14, )
  The Opinions propose measures to encourage the purchase in NEVs by registered local residents in certain rural areas such as the provision of consumer vouchers. Automobile companies and certain areas are encouraged to provide trade-in deals on obsolete low-speed electric vehicles when purchasing NEVs. Regional governments should strengthen co-operation between government and enterprise to develop and launch promotions such as free charging vouchers provided when purchasing a vehicle. Increase support for the provision of consumer car loans in rural areas.
• Ministry of Industry and Information Technology and 7 other departments Notice on Organizing and Executing Pilot Zone Tasks for the Comprehensive Electrification of Public Domain Vehicles    (January 3, )
  In addition to the implementation of the above policies, China has also introduced policy to facilitate the electrification of public domain vehicles.
  The Notice clarifies pilot areas for the comprehensive electrification of public domain vehicles (inc. official vehicles, urban public transport, rental cars, sanitation vehicles, postal and courier vehicles, urban logistics vehicles, airport vehicles, etc.) nationwide between and . Participating pilot cities must begin work to increase the level of vehicle electrification, facilitate the innovative application of new technology, improve battery swapping and charging infrastructure, and complete legislative and management systems.

1.3 Improve NEV Support Services

There were 13.1 million NEVs in China at the end of , comprising 4.10% of all cars in the nation. The volume of scrapped and written-off vehicles increased by 5.26 million cars, a 67.13% growth compared to . 10 45 million of these cars are pure electric vehicles, comprising 79.78% of all NEVs. This means that demand for NEV support services is growing by the day.

• General Office of the Ministry of Industry and Information Technology, General Office of the Ministry of Public Security, General Office of the Ministry of Transport, General Office of the Ministry of Emergency Management, General Office of the State Administration for Market Regulation Guiding Opinions on the Further Strengthening of Safety System Construction for New Energy Vehicle Enterprises (March 29, )
  The Opinions provides guidance for NEV enterprises on the accelerated construction of systematic, scientific, and standardized safety systems in order to comprehensively strengthen safety management, product quality, operation monitoring, after-sales service, accident response, and network security safety assurances.
• Ministry of Transport, National Energy Administration, State Grid Corporation of China, China Southern Power Grid Company Limited Action Plan to Accelerate Expressway Charging Infrastructure Construction      (August 1, )
  The Plan proposes the provision of basic charging services at expressway rest and service areas nationwide by the end of (with the exception of high-altitude regions); the provision of basic charging services at specific rest and service areas/stops along ordinary national highways by the end of ; and the increased provision and optimization of charging infrastructure at rest and service areas/stops along expressways and ordinary national highways with coverage for rural roadways by the end of .
  Tangible implementation steps are also laid out in the Plan: Create Implementation Plan (August 15, ); Organize construction and improvements (from August 15, to end December ); Stage Summary Assessment (December and December ); Expansion and Optimization Improvements (January to December ).
• National Railway Administration, Ministry of Industry and Information Technology, China State Railway Group Company, Ltd. Opinions on Supporting Railway Transportation Services for New Energy Vehicle Products to Support New Energy Vehicle Manufacturing (January 3, )
  The Opinions require that lithium-ion battery powered plug-in hybrid or pure electric NEVs covered by the scope of the Ministry of Industry and Information Technology Announcement on Road Motor Vehicle Production Enterprises and Products (exempting NEV products for export) are not treated as hazardous cargo when being transported by rail.
• NDRC, National Energy Administration Implementation Opinions on Accelerating Charging Infrastructure Construction to better support the Introduction of NEVs in and Revitalizing Rural Areas (May 14, )
  The Opinions propose the innovation of the construction, operation, and maintenance of charging infrastructure in rural areas, and the launching of work across five aspects: improving operations and maintenance services for charging infrastructure, improving the distribution of public charging infrastructure, promoting the construction and sharing of community charging infrastructure, increasing power grid capacity, and expanding new models like smart and managed charging.

2. Future Direction

NEVs in China boasted a production volume of 1.65 million vehicles (up 27.7% YoY) and a sales volume of 1.586 million (up 26.2% YoY) in the first quarter of and enjoyed 26.1% of the market share. In order to sustainably and efficiently develop the NEV industry, China will continue to launch relevant work with a real focus on: continued development of urban and rural sales of pure electric vehicles, applications in the public domain, improvements to supporting systems, infrastructure construction, etc., constructing the FCEV R&D-Industry chain, and rapid new-era multi-industry development driven by NEVs.

(1)    Continued development of urban and rural sales of pure electric vehicles, applications in the public domain, improvements to supporting systems, infrastructure construction, etc.

The NEV market is full of vitality and ownership is rapidly growing. Pure electric vehicles are currently the primary contributors to NEV ownership numbers in China. Market vitality is expected to decline as the pure EV industry slowly matures.

Growth and development has slowly highlighted demand for improved pure EV support services such as convenient charging, improved safety, and better after-sales service. Proper NEV support services need to both meet the demands of current owners and stimulate demand in the NEV market. China is also working hard to increase the usage of pure EVs in the public domain.

(2)    The FCEV R&D-Industry chain

September saw the release of the Notice on Launching Demonstration FCEV Projects by the Ministry of Finance, Ministry of Industry and Information Technology, Ministry of Science and Technology, and 2 other departments. The Notice clarified that implementation should take four years from when an urban area has been approved to participate in the demonstration. Rewards (rather than subsidies) should be used in the urban area to encourage the construction of FCEV industry chainlinks, launch new FCEV tech, demonstrate the application of new models, and explore efficient commercial operating models in an improved policy environment.

(3)    Rapid new-era multi-industry development driven by NEVs

NEVs are the basis on which the pace of development is accelerating for smart networks, green low-carbon industries, and smart cities. An investment of 400 million yuan was made in September for the official use of the China ICV, which boasts 22 world-class experimental vehicles.

To date, China has opened over 9,000Km of smart network vehicle testing roads, and renovated over 3,900Km of roads into smart roads. The Ministry of Industry and Information Technology has indicated that the Chinese Solution for integrated development of smart network vehicles and smart cities currently taking shape in China is responsible for the deep-level joint development being shared between three trillion-dollar industries (automobiles, information technology, and transport), adding a new chapter of growth to the legacy of China’s economic development.

In recent decades, China’s rapid economic growth has enabled more and more consumers to buy their own cars. The result has been improved mobility and the largest automotive market in the world — but also serious urban air pollution, high greenhouse gas emissions, and growing dependence on oil imports.

To counteract those troubling trends, the Chinese government has imposed policies to encourage the adoption of plug-in electric vehicles (EVs). Since buying an EV costs more than buying a conventional internal combustion engine (ICE) vehicle, in the government began to provide generous subsidies for EV purchases. But the price differential and the number of buyers were both large, so paying for the subsidies became extremely costly for the government.

As a result, China’s policymakers planned to phase out the subsidies at the end of and instead impose a mandate on car manufacturers. Simply stated, the mandate requires that a certain percent of all vehicles sold by a manufacturer each year must be battery-powered. To avoid financial penalties, every year manufacturers must earn a stipulated number of points, which are awarded for each EV produced based on a complex formula that takes into account range, energy efficiency, performance, and more. The requirements get tougher over time, with a goal of having EVs make up 40 percent of all car sales by .

This move will have a huge impact on the worldwide manufacture of EVs, according to William H. Green, the Hoyt C. Hottel Professor in Chemical Engineering. “This is one of the strongest mandates for electric cars worldwide, and it’s being imposed on the largest car market in the world,” he says. “There will be a gigantic increase in the manufacture of EVs and in the production of batteries for them, driving down the cost of both globally.”

For more New Energy Vehicles Chinainformation, please contact us. We will provide professional answers.

Explore more:
The Ultimate Guide to Choosing Longmarch 358 Tyre

But what will be the impact of the mandate within China? The transition to EVs will bring many environmental and other benefits. But how much will it cost the nation? In , MIT chemical engineering colleagues Green and then-graduate student I-Yun Lisa Hsieh PhD ’20 decided to find out. Their goal was to examine the mixed impacts of the mandate on all affected factors: battery prices, manufacturing costs, vehicle prices and sales, and the cost to the consumer of owning and operating a car. Based on their results, they could estimate the total societal cost of complying with the mandate in the coming decade. (Note that the Chinese government recently extended subsidy support for EVs for two years due to the Covid-19 pandemic and that this analysis was performed before that change was announced.)

Looking at battery prices

“The main reason why EVs are costly is that their batteries are expensive,” says Green. In recent years, battery prices have dropped rapidly, largely due to the “learning effect”: As production volumes increase, manufacturers find ways to improve efficiency, and costs go down. It’s generally assumed that battery prices will continue to decrease as EVs take over more of the car market.

Using a new modeling approach, Green and Hsieh determined that learning effects will lower costs appreciably for battery production, but not much for the mining and synthesis of critical battery materials. They concluded that the price of the most widely used EV battery technology — the lithium-ion nickel-manganese-cobalt battery — will indeed drop as more are manufactured. But the decline will slow as the price gets closer to the cost of the raw materials in it.

Using the resulting estimates of battery price, the researchers calculated the extra cost of manufacturing an EV over time and — assuming a standard markup for profit — determined the likely selling price for those cars. In previous work, they had used a variety of data sources and analytical techniques to determine “affordability” for the Chinese population — in other words, the fraction of their income available to spend on buying a car. Based on those findings, they examined the expected impact on car sales in China between and .

As a baseline for comparison, the researchers first assumed a “counterfactual” (not true-to-life) scenario — car sales without significant adoption of EVs, so without the new mandate. Under that assumption, annual projected car sales climb to more than 34 million by .

When the subsidy on EV purchases is eliminated and the mandate is enacted in , total car sales shrink. But thereafter, the growing economy and rising incomes increase consumer purchasing power and drive up the demand for private car ownership. Annual sales are on average 20 percent lower than in the counterfactual scenario, but they’re projected to reach about 30 million by .

The researchers also projected the breakdown in sales between ICE vehicles and battery EVs at three points in time. According to that analysis, in , EVs make up just 7 percent of the total (1.6 million vehicles). By , that share is up to 21 percent (5.4 million). And by , it’s up to 37 percent (11.2 million) — close to the government’s 40 percent target. Altogether, 66 million EVs are sold between and .

Those results also track the split between two types of plug-in EVs: pure battery EVs and hybrid EVs (which are powered by both batteries and gasoline). About twice as many pure battery EVs are sold than hybrid EVs, even though the former are more expensive due to the higher cost of their batteries. “The mandate includes a special preference for cars with a longer range, which means cars with large batteries,” says Green. “So carmakers have a big incentive to manufacture the pure battery EVs and be awarded extra points under the mandate formula.”

For the consumer, the added cost of owning an EV includes any difference in vehicle expenses over the whole lifetime of the car. To calculate that difference, the researchers quantified the “total cost of ownership,” or TCO, including the purchase cost, fuel cost, and operating and maintenance costs (including insurance) of their two plug-in EVs and an ICE vehicle out to .

Their results show that before , owning either type of plug-in EV is less costly than owning an ICE vehicle due to the subsidy paid on EV purchases. After the subsidy is removed and the mandate imposed in , owning a hybrid EV is comparable to owning an ICE vehicle. Owning a pure battery EV is more expensive due to its high-cost batteries. Dropping battery prices reduces total ownership cost for both types of EVs, but the pure battery EV remains more expensive out to .

Cost to society

The next step for the researchers was to calculate the total cost to China of forcing the adoption of EVs. The basic approach is straightforward: They take the extra TCO for each EV sold in each year, discount that cost to its present value, and multiply the resulting figure by the number of cars sold in that year. (They exclude taxes embedded in the purchase prices of the vehicle, of electricity and gasoline, and so on, as the society will have to pay other taxes to replace that lost revenue.)

Using that methodology, they calculated the incremental cost to society of each EV sold in each year as well as the extra cost per kilometer driven, assuming that the vehicle has a lifetime of 12 years and is driven 12,500 kilometers each year. The results show that the incremental cost of owning and driving an EV decreases from to . The cost declines more for pure battery EVs than for hybrid EVs, but the former remain more costly.

By combining the per-car cost to society with the number of cars sold, the researchers calculated the total extra cost incurred. In their results, the total number of EVs sold in a year more than offsets any decrease in per-vehicle cost, so the incremental cost to society grows. And that cost is sizeable. On average, the transition to EVs forced by the mandate will cost 100 billion yuan per year from to , which is about 2 percent of the nationwide expenditure in the transport sector every year.

During the 10 years from -30, the annual societal cost of the transition to almost 40 percent EVs is equivalent to about 0.1 percent of China’s growing gross domestic product. “So the cost to society of forcing the sale of EVs in place of ICE vehicles is significant,” says Hsieh. “People will have far less money in their pockets to spend on other purchases.”

Other considerations

Green and Hsieh stress that the high societal cost of the forced EV adoption must be considered in light of the potential benefits to be gained. For example, switching from ICE vehicles to EVs will lower air pollution and associated health costs; reduce carbon dioxide emissions to help mitigate climate change; and reduce reliance on imported petroleum, enhancing the country’s national energy security and balance of payments.

Hsieh is now working to quantify those benefits so that the team can perform a proper cost-benefit analysis of China’s transition to EVs. Her initial results suggest that the monetized benefits are — like the costs — substantial. “The benefits appear to be the same order of magnitude as the costs,” she says. “It’s so close that we need to be careful to get the numbers right.”

The researchers cite two other factors that may impact the cost side of the equation. In early , six Chinese megacities with high air pollution began restricting the number of license plates issued for ICE vehicles and charging high fees for them. With their lower-cost, more-abundant “green car plates,” EVs became cost-competitive, and sales soared. To protect Chinese carmakers, the national government recently announced that it plans to end those restrictions. The outcome and its impacts on EV sales remain uncertain. (Again, due to the pandemic, policies restricting car ownership have mostly been relaxed for now.)

The second caveat concerns how carmakers price their vehicles. The results reported here assume that prices are calculated as they are today: the cost of manufacturing the vehicle plus a certain percentage markup for profit. With the new mandate in place, automakers will need to change their pricing strategy so as to persuade enough buyers to purchase EVs to reach the required fraction. “We don’t know what they’re going to do, but one possibility is that they’ll lower the price of their battery cars and raise the price of their gasoline cars,” says Green. “That way, they can still make their profits while operating within the law.” As an example, he cites how U.S. carmakers responded to Corporate Average Fuel Economy standards by adjusting the relative prices of their low- and high-efficiency vehicles.

While such a change in Chinese automakers’ pricing strategy would lower the price of EVs, it would also push up average car prices overall, because the total car sales mix is dominated by ICE vehicles. “Some people in China who would otherwise be able to afford a cheap gasoline car now won’t be able to afford it,” says Hsieh. “They’ll be priced out of the market.”

Green emphasizes the impact of the mandate on all carmakers worldwide. “I can’t overstate how hugely important this is,” he says. “As soon as the mandate came out, carmakers realized that electric vehicles had become a major market rather than a niche market on the side.” And he believes that even without subsidies, the added expense of buying an EV won’t be prohibitive for many car buyers — especially in light of the benefits they offer.

However, he does have a final concern. As more and more EVs are manufactured, global supplies of critical battery materials will become increasingly limited. At the same time, however, the supply of spent batteries will increase, creating an opportunity to recycle critical materials for use in new batteries and simultaneously prevent environmental threats from their disposal. The researchers recommend that policymakers “help to integrate the entire industry chain among automakers, battery producers, used-car dealers, and scrap companies in battery recycling systems to achieve a more sustainable society.”

This research was supported through the MIT Energy Initiative’s Mobility of the Future study.

Want more information on Car Charging Devices Supply? Feel free to contact us.