For the last few years, China has utilized aggressive policies to tackle their growing pollution problem. One of the major industries that contribute to pollution and is affected by the policies is the auto industry. Last month, the country has set an aggressive draft regulation for electric and plug-in hybrid cars to make up at least 20 percent of all new car sales by 2025. The plan is to gradually reach the 20 percent mark of all new cars sales, but the staggering quota starts in less than six months, at the beginning of 2018. Automakers must meet the sales quota of electric or plug-in hybrid vehicles in order to generate "credits" equivalent to 8 percent of sales by 2018. The quota grows to 10 percent by 2019, 12 percent by 2020, eventually reaching the goal of 20 percent by 2025.
The number of credits per unit sold is based on the level of electrification. Beijing has the secondary objective of these regulations to help their domestic auto manufacturing industry to compete with foreign rivals which are decades ahead in experience and technology. Failure to uphold the quota will be met by harsh penalties for non-compliance. In some instances, auto manufacturers may see the cancellation of their licences to sell non-electric cars in China.
Even though Chinese Premier Li Keqiang and German Chancellor Angela Merkel met and agreed last month that concessions would be made, the ministry still released the draft regulations upholding the strict quota sales. The world's four largest automotive industry associations have now written to the Chinese government in an attempt to persuade the ministry to ease up on the strict sales quota, and softer penalties. The associations, which include roughly 70 percent of the global car production are based out of Europe, the United States, Japan and South Korea, have requested the quotas be postponed by at least one to three years. The association has also asked for personalized quotas to each auto manufacturers' production volume. This will avoid putting companies that produce a smaller volume of vehicles at a disadvantage. The ministry has declined to comment.