News Article

Car manufacturers rev-up ‘green’ plans as China increases sales goal to 25%

China is raising its 2025 nationwide sales target for “new-energy vehicles,” providing carmakers eager to expand in the world’s largest automotive market further incentive to work on their zero-emissions products.

On Tuesday, a proposal from the industry ministry requests for the category, which includes electric, plug-in hybrid and fuel-cell automobiles, to make up 25% of all new vehicles sold in 2025, up from just 4% in 2018. Two years ago, China set a target for 2025 of at least 20%.

The upgrade demonstrates Beijing’s continuing ambition in the field, even as cuts to government subsidies weakened demand and slowed growth this year. The minister’s proposal, covering 2021 to 2035 requires that the development of key components and systems be sped-up to make China a global leader in core new-energy vehicle technology.

In 2015, China became the biggest market for eco-friendly vehicles, accounting for 6% of all new cars sold in the country this year.

The increased sales target could further reshape the already shifting market. While domestic businesses are market leader, they compete with rivals like Tesla, who has developed a wholly owned subsidy in Shanghai and began mass electric vehicle production. The new-energy vehicles produced by Volkswagen have tripled year over year.

New-energy vehicles do not include traditional hybrids, the Japanese automaker’s speciality. Companies like Toyota Motor are working on plug-in hybrids that combine technologies with their current hybrid products. In addition to meeting China’s production and sales targets, they aim to use Beijing’s electrification campaign as an opportunity to expand.

Japanese players expect that the introduction of more electrified offerings, including battery-electric models, will help them win stronger shares against Chinese rivals. Last month, Toyota unveiled its first mass-market electric vehicle under its luxury Lexus brand at the Guangzhou International Automobile Exhibition.

Ride-hailing firms like Didi Chuxing, whose platform has an estimated 30 million vehicles, are expected to be a significant driver of demand for environmentally friendly cars. Many local government authorities are now only allowing new-energy vehicles to register for these services as they strive to battle pollution.

The industry ministry further plans for an increase in the share of vehicles with autonomous-driving technology and commercialising cars that can work without human interaction by 2025. The plan is anticipated to finalise by the first half of 2020.

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