Electric Vehicles
Bloomberg Businessweek Middle East|December 01, 2018 The Year Ahead 2019

China’s new emission rules will force global carmakers to redraw their road maps

Matthew Campbell

The world’s biggest market for electric vehicles wants to get even bigger, so it’s giving automakers what amounts to an ultimatum. Starting in January, all major manufacturers operating in China—from global giants Toyota Motor and General Motors to domestic players BYD and BAIC Motor—have to meet minimum requirements there for producing new-energy vehicles, or NEVs (plug-in hybrids, pure-battery electrics, and fuel-cell autos). A complex government equation requires that a sizable portion of their production or imports must be green in 2019, with escalating goals thereafter.

The regime resembles the cap-and-trade systems being deployed worldwide for carbon emissions: Carmakers that don’t meet the quota themselves can purchase credits from rivals that exceed it. But if they can’t buy enough credits, they face government fines or, in a worst-case scenario, having their assembly lines shut down.

“The pressure is mounting,” says Yunshi Wang, director of the China Center for Energy and Transportation at the University of California at Davis. “This could be a model for other countries; it could be a game changer globally.”

The message coming from the world’s largest emitter of greenhouse gases is clear: Even as President Trump withdraws support for alternative fuels, attempts to gut mileage requirements, and begins the process of pulling out of the Paris Agreement on climate change, China is dead serious about leading the way to an electrified future. That would help it reduce a dependence on imported oil and blow away the smog choking its cities. It would also help domestic automakers gain more expertise in a car manufacturing segment that’s burgeoning globally.

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