German Automakers Sweat Over China's Draft Electric-Vehicle Quotas
German automakers have been swept up in a wave of apprehension over China's release of draft guidelines that would stipulate that carmakers must produce a certain ratio of electric or hybrid cars — a bid to promote electric vehicles over those powered by gasoline and diesel.
Companies like BMW and Volkswagen have been concerned since the new-energy-vehicle draft guidelines were published in August and September, fearing that the rigid quota and credit systems will leave them in the wake of their Japanese and American counterparts, who have an edge in low-emissions vehicle technology.
Though the specifications are not yet definite and may be subject to revision depending on the feedback, "the unrest in the industry is enormous," said Jochen Siebert, director of the consulting firm JSC Automotive in Shanghai.
Proposed by the draft is a system with tradable credits and minimum ratios of clean vehicles, modeled after the Zero Emission Vehicle regulation in California. The system is intended to reward electric-car makers, who will be able to sell for a profit any surplus credits to companies that fall short in their new-energy vehicle quotas.
Even BMW, a pioneer in electric vehicles by German standards, will struggle to comply under the new system. The German newspaper Süddeutsche Zeitung reported that only 0.3% of its 379,000 cars sold in the first three quarter of this year were electric — a far cry from the 8% ratio companies are expected to reach by 2018.
BMW would have no choice but to cut the production of traditional cars or buy credit from companies that outperform it in electric-vehicle production. The price of such credits would be determined by the selling party, and may well go through the roof, considering the difficulty of ensuring that 12% of cars on their assembly lines must be using alternative forms of energy by 2020.
"Entry-level car makers like Volkswagen will suffer an even harder blow and will be bogged down with a massive base of low-cost traditional vehicles, which it will have to match with an immense electric-vehicle output," said the secretary general of the China Passenger Car Association, Cui Dongshu.
A minimum of 60,000 electric vehicles or 120,000 hybrids would be required to be built if Volkswagen continues to sell as many as 3 million cars per year in China.
The German press is banking on the lobbying powers of their officials to negotiate more-favorable terms. However, China appears to be adamant about its drive toward electric vehicles, and will be unlikely to be leaving room for exceptions.
During a meeting with the German minister for economic affairs and energy, Sigmar Gabriel, earlier this month, China's minister for industry and information technology, Miao Yu, said that German manufacturers will not receive differential treatment under the new electric-vehicle policies, as Gabriel voiced concerns of German carmakers.
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