China will minimize government intervention to allow carmakers more freedom to decide the direction of new energy vehicle technology development, according to a plan published Tuesday by the Ministry of Industry and Information Technology (MIIT).
Why it matters: The new plan is regarded as a major policy shift from an earlier initiative which aggressively promoted all-electric vehicle development as part of Beijing’s push for a global leadership in key technologies.
- Purchase subsidies lasting 10 years and mandate policies that favored electric vehicles created a demand bubble, with October sales highlighting an accelerating decline after subsidies were drastically reduced in June.
- China Association of Automobile Manufacturers has cut its 2019 NEV sales forecast to 1.4 million units, a mere 11% increase over last year.
Details: China will allow the market full play in determining product and technology development, MIIT said in a development plan released Tuesday.
- In a shift from its singular focus on fully electric vehicle technology, the plan more broadly promotes new energy vehicle development, primarily fully-electric, plug-in hybrid (PHEV), and fuel-cell vehicles.
- Beijing is aiming for NEVs to comprise one quarter of new car sales by 2025, with energy consumption of 12 kilowatt hours per 100 kilometers for a fully electric vehicle and 2 liters (around half a gallon) of gas for an PHEV.
- The government will encourage capital funds to play a larger role in accelerating “optimized restructuring” in OEMs and auto parts suppliers for better resource aggregation.
- Beijing also plans to speed up the construction of its charging infrastructure network. Real estate developers and charging facility operators are expected to gain government support to jointly offer public charging services and “exploring value-added services,” for which no specifics were offered.
- The draft version is open for public review until Dec. 9.
Context: China’s State Council mapped out an eight-year blueprint for NEV development in 2012, setting an annual sales goal of more than 2 million EVs by 2020.
- All-electric vehicles were picked as the major “driving force” for a larger industry revolution, with both “guidance from the government” and market forces to influence development, according to the plan.
- Chinese automakers may fail to meet the target as industry experts see few signs of recovery until the end of the first quarter of 2020.
- Other green vehicle technology, particularly PHEV, is more popular with consumers TechNode has spoken with because it addresses important barriers to fully electric vehicle adoption, such as range anxiety.
Includes contributions from Lavender Au.