China’s New NEV Regulations for 2021–2023
Following the implementation of the first phase of China’s NEV regulations for the period of 2019-2020, regulations for the second phase for the period of 2021-2023 are now under review. In July and September 2019, China’s Ministry of Industry and Information Technology (MIIT) collected opinions on the proposal for the second stage of NEV regulations. The industry expects that NEV credit requirements will gradually increase from 10% in 2019 and 12% in 2020 to 14% in 2021, 16% in 2022 and 18% in 2023. In addition, the establishment of a new category of fuel-efficient vehicles is being considered. If the new category is put into practice, it will be easier for Japanese automakers that are strong in the HEV sector to respond to NEV regulations.
48V (P0), which has been promoted by European OEMs, is unlikely to be certified as a fuel-efficient system in China. On the other hand, it is a favorable policy change for Japanese automakers that have a lineup of HEVs that are recognized as fuel-efficient vehicles. According to the proposal released in July 2019, the number of vehicles with internal combustion engine (ICE), which is the base for calculating NEV credits, is calculated as 0.2 fuel-efficient vehicles. The industry quickly reacted that such policy is too favorable for Japanese automakers. For this reason, a second proposal was released in September 2019 revising 0.2 unit figure to 0.5.
FOURIN has estimated the difference between 0.2 unit and 0.5 unit from the production volume of Toyota and Honda in 2019. Assuming that all ICEs are HEVs, calculating with 0.5 unit will result in negative NEV credits. If the 0.2 unit figure is used for calculation, NEV regulations can be cleared by manufacturing about 10,000 NEVs at present.
On the other hand, NEV sales have been sluggish due to a significant reduction in subsidies since July 2019. Meanwhile HEV sales by Toyota and Honda have continued to increase. HEV technology is gradually gaining ground in China. Due to industry interests, there may be a readjustment of HEV incentives before the announcement of the second draft phase.