The Chinese government is taking a multi-pronged approach to move from fossil fuels to electric as it announced that it expects 25% of cars sold in 2025 to be new energy vehicles (NEV). This will includes electric vehicles (EVs), cars powered by renewable energy such as hydrogen fuel and electric hybrid vehicles.
A draft proposal that was released by the Ministry of Industry and Information Technology (MIIT) focuses on the 2021 through 2035 time frame and comes at a time when the country’s EV market has seen declining sales over the past few months after the government started to phase out its subsidy scheme for the EV sector.
A report by Evergrande Research Institute states that in 2018, NEV sales in China hit an all-time high of 1.25 million units, but these sales account for only 4.5% of total vehicle sales in the country. China rolled back subsidies on NEVs with less than 250 kilometers (about 155 miles) of electric range, and it halved subsidies for higher ranges. NEV sales fell for the first time in July, which was followed by August’s accelerated decline.
Automobile industry executives commented on the governments goal and said that Beijing’s ambition to leapfrog the sales from 2018’s 4.5% to 25% in 2025 brings opportunities to expand the use of environmentally friendly vehicles, but that there are a number of serious challenges for the local EV sector at the same time.
The MIIT draft plan requires that new cars running in public areas in key regions fighting air pollution should be NEVs starting from 2021. Multiple cities in China are also independently setting up similar policies and this year has seen Kunming, Shenzhen, Wuhan ad Zhengzhou implemented policies this year, including asking all newly-registered cars for online ride-hailing services to be fully electric.
The MIIT draft plan also says that China will need to continue to continue with research and development activities that boost technological innovation and breakthroughs in EV batteries and in-car operating systems. Additionally, the country needs to improve infrastructure development in driverless vehicles as well as hydrogen fuel.