China to moderately raise required NEV credit ratio for year of 2021, 2022, 2023

Shanghai (Gasgoo)- China's Ministry of Industry and Information Technology (MIIT) issued on July 9 the amendments to the Measures for the Parallel Administration of the Average Fuel Consumption and New Energy Vehicle Credits of Passenger Vehicle Enterprises (hereinafter referred to as the Measures or Dual Credit Policy for NEVs), which was issued in September 2017, and is soliciting public opinion on the amendments by August 9, 2019.

The authority said the launching and implementation of the Measures has been playing a significant role in prompting the automobile industry to elevate energy-saving technologies and boosting the development of NEV industry.

The expected effects for the Dual Credit Policy has been basically achieved, said the MIIT. In 2018, full-year sales of new energy passenger vehicles in China reached 1.028 million units, the fourth year in a row ranking 1st in the world. Besides, industrial average fuel consumption for the year of 2018 was 5.8L/100km, down by 10% over the number for 2016.

(1) Revising the scope of traditional energy PVs applicable to the Measures

For the purpose of the Measures, traditional energy PVs means PVs (including non-plug-in hybrid PVs) that may be fueled with gasoline, diesel or gas fuel, except new energy PVs.

According to the Amendments, the PVs that can be powered by alcohol ether fuel are added into the applicable scope.

(2) Upgrading the annual mandatory requirements on NEV credit ratio

Based on the Amendments, the credit ratios of new energy vehicles are respectively required to be 14%, 16% and 18% for the year of 2021, 2022 and 2023, compared with 10% and 12% for 2019 and 2020 required by the original Measures.

The requirements for the credit ratios of new energy vehicles for 2024 and the future years shall be separately announced by the MIIT.

(3) Improving the measures on guidance of traditional energy PV's fuel consumption and the flexibility of NEV credits

Some adjustments should be conducted to help enterprises further improve the energy-saving level of traditional PVs and offer companies more legal flexibility.

The first is to form the correlation between company's energy-saving level over traditional energy-powered PVs and the carry-forward of NEV credit surplus.

The Amendments said the NEV credit surplus incurred in 2019 and after that can be carried forward for no more than three years in accordance with the following rules:

1) The NEV credit surplus churned out in 2019 can be carried forward for one year in equivalent.

2) The NEV credit surplus available for 2020 can be carried forward at a ratio of 50% each time.

3) An enterprise, which gets a ratio of the actual annual average fuel consumption on its traditional energy PVs to its up-to-standard average fuel consumption no higher than 123%, is allowed to carry forward its NEV credits incurred in that year at a ratio of 50% each time.

In addition, the NEV surplus created by enterprises which only produce or import NEVs can be carried forward at a ratio of 50% as well.

The second is to reduce the base number on calculation of the up-to-standard NEV credits for low-fuel-consumption PVs.

Apart from guiding an overall decline on companies’ fuel consumption over conventional energy PVs, the Amendments also encourages carmakers to research and develop low-fuel-consumption vehicles with a slightly reduced requirement for the amount of EVs they must churn out.

Under the revised provisions, when calculating the target value of PV manufacturers' NEV credits, the production outputs or the import volume for low-fuel-consumption PVs shall be calculated at a 20% discount.

(4) Upgrading the preferential policy for small-scale enterprises

The Amendments further loosen the requirement for small-scale enterprises on up-to-standard average fuel consumption credits on the basis of what is required by the Evaluation Methods and Indicators for the Fuel Consumption of Passenger Vehicles.

“For domestic PV manufacturers whose output in an accounting year is not more than 2,000 units and which maintain independent production, research and development and business operation, and imported passenger vehicle suppliers that import vehicles not more than 2,000 units and are authorized by overseas passenger vehicle manufacturers, the up-to-standard requirements for their average fuel consumption credits shall be relaxed according to the following provisions:

Where their average fuel consumption from 2021 and 2023 falls by not less than 4% from the previous year, their up-to-standard average fuel consumption shall be relaxed by 60% on the basis of the average fuel consumption as set forth in the Evaluation Methods and Indicators for the Fuel Consumption of Passenger Vehicles; if the average fuel consumption falls by not less than 2% nor more than 4%, their up-to-standard value shall be relaxed by 30%.”