UPDATE-China NEV sales quota system takes effect on April 1, 2018

Shanghai (Gasgoo)-On September 28, the Ministry of Industry and Information Technology (MIIT) officially released the dual-credit system and said the system will take effect from April 1, 2018.

The dual credits refer to passenger vehicle companies’ average fuel consumption credits and the new energy vehicles’ credits. Two credits system will be in parallel management. The formulation of this system is to set up long-term management system for energy-saving and new energy vehicles (NEV), promote auto industry’s sound development and alleviate energy and environment pressures. 

MIIT’s statement won’t set NEV credit standard for those passenger vehicle companies whose annual output or import volume is less than 30,000 units. The government will set 2019 deadline for carmakers to meet NEV sales quotas. According to the newly announced system, the 2019 new energy vehicles sales quota for automakers should be 10 percent of their annual vehicle sales. For the following year 2020, the sales quota will be up to 12 percent of carmakers’ annual sales. The quota for 2021 and the following years will be announced later.

The system regulation also makes specifications for the credit calculation method and system, the credit management and the parallel management method, etc.

Establish credit calculation system and credit management platform. Both Passenger vehicle companies inside China and those companies supplying importing vehicles are the objects for the dual-credit system and will be calculated separately. A management platform should be set up for companies to publicize, transfer and trade credits.

Clarify credit calculation method. The regulation makes clear the calculation method of credits, the actual value, the target etc.

Soften conditionally the fuel consumption requirement for small-scale companies. Since those companies have few scale advantage and it’s much more difficult for them to reduce consumption, the regulation would relax consumption requirements. Those companies include local companies which have an annual output of less than 2,000 units with independent manufacturing, developing and operating abilities, passenger vehicle supplying companies whose annual import volume is no more than 2,000 units with overseas carmakers’ license and those which haven’t received license.

Dual credit system will be in parallel management. As to the corporate average fuel consumption (CAFC), the positive credits can be carried over to the following year or transferred to other related companies. Companies can use the positive credits carried over from the previous year or transferred from related companies to offset negative credits. NEV positive credits can also be used to offset negative CAFC credits. One positive credit can be equal to one negative CAFC credit. Companies can trade NEV credits freely, but NEV credits cannot be carried over. (2019 positive NEV credits can be carried over only to the following year.) Companies can buy NEV credits to offset negative ones. Companies should finishing offsetting its negative credits within 90 days after MIIT announced the results.

Improve the supervision and management system. MIIT will examine the credits with the Finance Ministry, the Commerce Department, the Customs and the quality regulator, and then issues annual credits report. Companies should submit and publicize credit commitment letter. Those which fail to submit the data and report, for a severe violation, will be criticized publicly as companies which break their own promise.