China

Major Developments in 2020

In the first half of 2020, the production and sales of Chinese new energy vehicles (NEVs) decreased significantly, predominately as a result of the Covid-19 pandemic. However, since July, the production and sales have begun to increase, and the growth rate gradually improved. The annual production and sales of NEVs in 2020 increased by 7.5% and 10.9% respectively.

Macro Industry Planning

By 2025, the average power consumption of new battery electric passenger cars will be reduced to 12.0 kWh/100 km, and new NEV sales will account for about 20% of the total new vehicle sales. By 2035, the core technologies of NEVs will reach the advanced international level.

Credits Compliance Policies

The Ministry of Industry and Information Technology (MIIT) of China made amendments to the NEV policy in 2017. The Amendments have specified that the credit ratios of new energy vehicles (NEVs) are respectively required to be 14%, 16% and 18% for the year of 2021, 2022 and 2023, rising from 10% and 12% formerly requested for 2019 and 2020. The policy further added preferential measures for low fuel consumption models and regulations that allow NEV credits to be carried forward.

Fiscal and Tax Policies

Several government ministries jointly issued the Notice on Improving the Fiscal Subsidy Policies for the Promotion and Application of New Energy Vehicles. The policy clarified the subsidy measures for NEVs in 2020. The price of new energy passenger cars had to be less than $46,440 (including $46,440) to enjoy the subsidy. To encourage the development of the new business model of "Battery Swap" and accelerate the promotion of NEVs, "Battery Swap" vehicles are not subject to this regulation.

Outlook

From the perspective of the development trend of the automobile industry, the consumer demand will speed up recovery with the steady rebound of the national economy. Also, the overall potential of the Chinese automobile market is still huge. Therefore, it is estimated that 2020 may be the year prior to the rapid growth of China's automobile market, and 2021 will realise the positive growth. China's new energy vehicle industry has formed a complete industrial chain, including the supply of raw materials, the R&D and production of key components such as power batteries and drive motors, as well as the design and development of complete vehicles and the supporting construction of charging infrastructure. It is expected that China will have a number of world-class automobile and component enterprises in the whole industrial chain of new energy vehicles and power batteries, as the new energy vehicle industry has entered a period of rapid development.