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2017-11-01 13:08:53

[National Policy Insight] New Energy Vehicles: "Double Points" Onslaught - Who's Happy, Who's Worried

June 22, 2017 21:03 People's Daily Central Kitchen

Recently, a paper notice from the State Council has made many car companies more apprehensive.

Recently, the Legislative Affairs Office of the State Council issued the "Parallel Management Measures for Passenger Vehicle Enterprises' Average Fuel Consumption and New Energy Vehicle Points (Draft for Comments)" (hereinafter referred to as the "Double Points Management Measures").

In the 2017 version of the "Double Points Management Measures", the temporary term "Interim" was removed, indicating that this policy, once implemented, will become a long-term established policy.

The "Double Points Management Measures" further outlines two core messages:

First, negative points for fuel consumption and negative points for new energy vehicles must be balanced with positive points for new energy vehicles. However, positive points for new energy vehicles are only allowed for trading and cannot be carried forward to the following year.

Second, the "Double Points Management Measures" will be implemented in 2018. From 2018 to 2020, except for small-scale enterprises producing or importing fewer than 2,000 vehicles annually, other car companies' new energy vehicle points ratio requirements will be 8%, 10%, and 12% respectively. The point requirements after 2020 will be specified separately.

Enterprises failing to meet the point standards and failing to offset negative points will face penalties such as suspension of automobile catalog declaration and cessation of production or importation of certain traditional automobile models.

It is evident from the policy terms that all point tasks can be fulfilled by producing new energy vehicle models or purchasing new energy points from other car companies.

The purpose of the "Double Points Management Measures" is evident: to promote the development of energy-saving technology for traditional fuel vehicles and encourage car companies to produce new energy vehicle models through regulatory policies.

So why has the "Double Points Management Measures" repeatedly caused a stir in the Chinese automotive market?

How are the points calculated?

Since 2009, the state and local governments have strongly supported the development of the new energy vehicle industry and introduced a series of policies to encourage the production and use of new energy vehicles.

With the help of the national and local "1+1" model's substantial financial subsidies, the new energy vehicle industry has experienced rapid growth.

However, under financial subsidies, the phenomenon of car companies cheating has emerged endlessly.

On September 8, 2016, the Ministry of Finance listed five cases of fraud in subsidies for new energy vehicle manufacturers, includi

That month, for the first time, the Ministry of Industry and Information Technology issued the "Double Points Management Measures (draft for comments)", the core content of which is to establish a trading system between enterprises based on fuel consumption points and new energy points, allowing the decline of financial subsidies, and leveraging industrial policies to strengthen market competition.

At the end of 2016, four ministries including the National Development and Reform Commission, the Ministry of Finance, the Ministry of Industry and Information Technology, and the Ministry of Science and Technology issued the "Notice on Adjusting the Financial Subsidy Policy for Promoting and Applying New Energy Vehicles", specifying that energy vehicle subsidies will decline by 20% year by year until completely stopped by 2020.

So after the ebb of subsidies, how can the new energy automobile industry continue to thrive? This is when the new energy points policy comes into play.

The so-called "double points" refer to fuel consumption points and new energy vehicle points, and the accounting entities for both points are passenger car enterprises.

If the actual value of the enterprise's fuel consumption is lower than the standard value, a positive point is generated; otherwise, a negative point is generated. Similarly, if the actual value of the new energy vehicle points exceeds the target value, a positive point is generated, otherwise, it's a negative point.

"Subsidy decline + points system" is the core of the "13th Five-Year" new energy vehicle policy and a crucial measure for the marketization of new energy vehicles.

The industry believes this is a significant boon for the new energy automobile industry.

The auto market will face a situation of points "inequality", where under policy pressure, some are happy while others are worried.

Domestic car companies made early efforts in the new energy vehicle field, but Great Wall Motor, specializing in high-fuel consumption SUVs, has been hit hard.

The impact is more extensive, affecting cautious traditional giants like Toyota, Volkswagen, General Motors in the new energy vehicle business.

In the view of the German side, China's new energy vehicle market is monopolized by local car brands.

The dual points system has even become a significant aspect in Sino-German negotiations on electric vehicle cooperation.

Although the points policy has set a timetable, considering the development status of foreign-funded enterprises and some independent brands, implementation difficulties are significant.

Obviously, the arrival of the new points policy has become a trend, leading to inevitable business adjustments for domestic and foreign-funded car enterprises.

A new round of changes in the automobile industry is underway.

(He Zizang, Central Kitchen and National Policy Studio, People's Daily)

2017-11-01 13:08:53