Car manufacturers plead with China over ambitious EV plans

Global automakers have sent a letter to the Chinese government, pleading with them to soften planned quotas and regulations aimed at the accelerated development of electric vehicles, citing potential damage to their businesses.

The letter, first reported in Witschaft Woche magazine, was signed by the American Automotive Policy Council, the European Automobile Manufacturers Association, the Japan Automobile Manufacturers Association and the Korea Automobile Manufacturers Association.
Electric vehicle charging signage
China wants a fifth of its autosales to be made up of electric vehicles by 2025, as it attempts to curb air pollution and lead the way for the new car industry, and they aim to do that by introducing quotas from next year.

The targets demand firms sell electric or plug-in hybrid vehicles to generate “credits” equivalent to 8 per cent of total sales by 2018, 10 per cent by 2019 and 12 per cent by 2020. There will be planned harsh penalties for non-compliance, such as the cancellation of licenses to sell non- electric cars in China.

Beijing sees the policy as a means to help the domestic car industry to compete with foreign rivals that have decades more experience in internal combustion engines.

“The proposed rules’ ambitious enforcement date is not possible to meet,” the letter from international auto industry bodies said.

“At a minimum, the mandate needs to be delayed a year and include additional flexibilities.”

The auto industry bodies also asked for China to reconsider some of the penalties for not achieving the quotas, such as plans to ban carmakers from importing and producing non-new energy vehicles altogether, as well as a call for equal treatment of Chinese and foreign makers. Currently foreign carmakers are excluded from getting full subsidies for new energy vehicles and batteries, leaving manufacturers such as Tesla at a disadvantage.

“This preference for domestic automakers over import automakers undermines the environmental goals of the regulation, puts imports at a competitive disadvantage, and risks opening China up to international trade disputes,” the letter said.

Chinese manufacturers are the biggest producers of electric vehicles worldwide, making 43 percent of the total last year.

European carmakers such as Daimler have responded to the Chinese proposals by announcing plans to ramp up local production of electric cars, while Tesla has said it is in talks with the Shanghai Municipal government to try to avoid a 25 per cent tariff on imported vehicles.

Foreign manufacturers also want more credit given to plug-in hybrid cars, and for carmakers to be allowed to “bank” credits accrued from already sold cars as well as to “carry forward” credits into subsequent model years.

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