China’s fossil fuel deadline revs up electric car race

BEIJING — China will set a deadline for automakers to end sales of fossil-fuel-powered vehicles, becoming the biggest market to do so in a move that will accelerate the push into the electric car market led by companies including BYD Company and BAIC Motor Corporation.

Mr Xin Guobin, the vice-minister of industry and information technology, said the government is working with other regulators on a timetable to end production and sales.

The move will have a profound impact on the environment and growth of China’s auto industry, he said at an auto forum in Tianjin over the weekend.

The world’s second-biggest economy, which has vowed to cap its carbon emissions by 2030 and curb worsening air pollution, is the latest to join countries such as the United Kingdom and France seeking to phase out vehicles using petrol and diesel.

The looming ban on combustion-engine automobiles will goad both local and global automakers to focus on introducing more zero-emission electric cars to help clean up smog-choked major cities.

“The implementation of the ban for such a big market like China can be later than 2040,” said Mr Liu Zhijia, an assistant general manager at Chery Automobile Company, the country’s biggest passenger car exporter that unveiled a new line for upscale battery-powered and plug-in hybrid models at the Frankfurt motor show last week. “That will leave plenty of time for everyone to prepare.”

BYD, China’s largest electric-vehicle maker, gained as much as 7.2 per cent to HK$50.65 (S$8.70) while BAIC advanced as much as 2.9 per cent to HK$7.09 in Hong Kong trading. Guoxuan High-Tech Company, an electric-vehicle (EV) battery manufacturer, rose as much as 5.3 per cent to 33.70 yuan (S$6.95) in Shenzhen.

China’s vehicle sales rose for the third consecutive month in August, as “solid” demand for passenger cars and a surge in demand for trucks sustained a rebound in the world’s biggest auto market, an industry body said yesterday.

Overall sales reached 2.19 million vehicles in August, 5.3 per cent more than in the same month a year earlier, showed data from the China Association of Automobile Manufacturers. That took year-to-date growth to 17.5 million, up 4.3 per cent.

While many global manufacturers, from billionaire Elon Musk’s Tesla Incorporated to Nissan Motor Company and General Motors Company, are racing to grab a slice of the electric-vehicle market in China, it is the local manufacturers that have found considerable success, thanks to generous government subsidies.

Warren Buffett-backed BYD led the pack in sales in the first seven months of this year, delivering 46,855 electric and plug-in hybrid vehicles, according to the China Passenger Car Association.

Beijing Electric Vehicle, the EV division of state-owned BAIC Motor, followed with 36,084 units.

In comparison, General Motors has sold 738 cars that run on electricity since it launched the Velite 5 plug-in hybrid model at the Shanghai auto show this April.

That is 0.04 per cent of its 2.1 million vehicles sold in total in China during the seven months.

Besides subsidies that are also aimed at meeting the strategic goal of cutting expensive oil imports, the government plans to require automakers to earn enough credits or buy them from competitors with a surplus under a new cap-and-trade programme for fuel economy and emissions.

Honda Motor Company will launch its electric car for the China market next year, the country’s chief operating officer Yasuhide Mizuno said at the Tianjin forum.

The Japanese carmaker is developing the vehicle as a joint venture with Chinese firms Guangqi Honda Automobile Company and Dongfeng Honda Automobile Company, and will create a new brand with them, he said.

Tesla said in June that it is working with the Shanghai government to explore local manufacturing, a move that would allow it to achieve economies of scale and bring down manufacturing, labour and shipping costs.

Though China has announced its intentions, the process will be complicated and will take time for all the auto-sector regulators to come up with an implementation plan, said Mr Zhang Yang, a vice-president at Nio start-up automaker. But this will help set a clear direction for manufacturers, he said on the sidelines of the Tianjin forum. China has the world’s largest scale of fossil-fuel vehicle production facilities.

“This will ask everyone, from the energy and technology sectors as well as traditional automakers, to change to the lane to develop new powertrains,’’ said Mr Zhang. “It’s hard to say who can be the winners. All of us should stand the test of speed and endurance in this run.’’ AGENCIES


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