Electric vehicles: New MIIT reports from China

EV electric vehicle

On the 10th April, China’s Ministry of Industry and Information Technology (MIIT) released the Corporate Average Fuel Consumption (CAFC) and New Energy Vehicle (NEV) credit results of passenger vehicle companies in 2017. The results included 99 domestic passenger vehicle companies and 29 passenger vehicle importers. Among the 128 companies, half of the companies had no NEV credits at all, and 52 companies had negative CAFC credits. 55 self-owned vehicle companies achieved 1.69 million NEV credits in total. The Top 5 NEV credit achievers were BYD, BAIC BJEV, Geely, SAIC and Zhejiang Haoqing, which all had more than 100k of NEV credits respectively. 29 vehicle importers created 106k NEV credits in total. Tesla yielded the most NEV credits of 85,000, which accounted for 80% of the total NEV credits of the vehicle importers.

Roskill View: The implementation of Dual-credit Policy demonstrates the determination of the Chinese government to accelerate the NEV-oriented reform, and shifts the development pressure to the manufacturers and importers of the passenger vehicles. Both domestic passenger vehicle manufacturers and importers are subject to CAFC and NEV credits calculation. An independent and non-profit credit transaction platform will be developed by the MIIT for the administration and evaluation of the dual-credit scheme. The dual-credit scheme will be in parallel management, negative CAFC credits can be offset by purchasing NEV credits.

Some industry experts predict the market price of each NEV credit will be worth between RMB 800 -1,000. Since 2019 will be the deadline for companies to meet NEV sales quotas (i.e. 10% of a company’s annual vehicle sales), the market price can possibly increase to RMB 3,000/credit by 2019. Some experts even predict that the price is likely to rise sharply to RMB 8,000/credit between 2019 and 2020. Changan Ford had the biggest negative CAFC credit in 2017, i.e. -287,823. If one NEV credit equals RMB 1,000, Changan Ford may need to spend RMB 288 million. However, the performance appraisal/evaluation of the dual-credit scheme will start in 2019, companies still have one year to prepare for the evaluation.