- Green vehicles will make up one in five automobiles on China’s roads by 2025, according to the State Council’s development plan for so-called new energy vehicles (NEVs) for 2021 to 2035
- That target is the same as the sales goal outlined four years ago in the Made in China 2025 industrial master plan
China’s planners are maintaining their bullish target to spur home-grown brands in the world’s biggest electric vehicle market as they repackaged a controversial industrial plan under a new guise, seizing the opportunity to keep factories churning while competitors lay idle amid the coronavirus pandemic.
Green vehicles – comprising pure electric cars, petroleum-electric hybrids and vehicles that run on fuel cells – will make up one in five automobiles on China’s roads by 2025, according to a development plan for so-called new energy vehicles (NEVs) for 2021 to 2035, released by the State Council. The government cabinet said the development guidelines published late on Monday were aimed at “boosting high-quality development of the industry.”
The ambitious target, representing a threefold jump from last year’s NEV sales, was the same as the goal stated in Made in China 2025, a controversial industrial master plan with specific targets for home-grown champions that raised the ire of global competitors, paving the way for the deterioration in US-China relations that eventually led to the bruising trade war between the world’s two top economies.
“The government has multiple leverages to boost electric vehicle sales, including public purchases, tax concession on EV, reduction on usage cost of EV, and increasing the cost of production and use for internal combustion engine cars,” wrote UOB Kay Hian (Hong Kong)’s analyst Ken Lee in a report, adding that China’s annualised sales growth could increase by 36 per cent between 2021 and 2025.
The Made in China 2025 plan, first published in 2016, charted China’s ambitions to lead the world in 10 key areas of technology by the middle of the next decade, from 5G telecommunications to artificial intelligence and electric vehicles.
The plan was deemed over-optimistic, just as China’s vehicle sales lost pace after decades of breakneck pace, which saw it overtaking the US as the world’s largest market for automobiles in 2009.
The central government and provincial authorities are expected to roll out generous policies to entice buyers to ditch their petrol-guzzlers for electric vehicles, as well as give manufacturers and battery makers the incentives to invest in capacity, since the sales target have been kept unchanged. Cash subsidies will be kept to encourage consumers to make the switch.
The government will also splash money on building infrastructure, especially a network of charging stations in rural villages and the countryside to spur usage. The State Council’s development plan is designed to accelerate the development of automotive operating systems and efficient power battery recycling system.
“The government officials have seen encouraging signs of a buoyant NEV industry,” said Gao Shen, an independent analyst of manufacturing sectors in Shanghai. “Companies in the industry, particularly those leading players, will grow fast in the coming years as they expand production and increase sales.”
China’s NEV sales grew 5.1 per cent to 1.06 million units last year, accounting for less than 5 per cent of total new passenger car deliveries, according to data by the China Passenger Car Association (CPCA), an industry guild. In the first nine months, NEV sales fell 19.3 per cent to 601,000 units from the same period last year, due to disruptions in production and distribution of cars caused by Covid-19 lockdowns and quarantines that affected China in February and March.
Since then, China emerged from the pandemic lockdown, and most factories returned to almost full production. Sales jumped by 84.2 per cent to 111,000 vehicles in September, as consumer confidence returned in the world’s second-largest economy, and the only major economy forecast to register growth in 2020.