China is developing a national strategy on smart cars and considering banning the production and sale of diesel and petrol cars and vans.
The country’s Vice Industry and information technology Minister Xin Guobin told a forum on automotive industry development in Tianjin that the plan had started with “relevant research” but that it had not yet decided when the ban would come into force.
He added that his ministry will work out the timetable.
China made and sold more than 28 million vehicles in 2016, the eighth year as the world’s biggest producer and manufacturer. China’s auto industry contributed at least one tenth of total retail sales of consumer goods.
China also leads as the largest producer and market for new energy vehicles. More than 500,000 of them were built and sold last year. There are more than 1 million new energy vehicles on the road, or half of the world total.
To encourage development of new energy vehicles, subsidies of as much as half of the original price are available, but in the long term, such subsidies may lead to blind expansion by auto makers, said Song Qiuling, a deputy section chief from the Ministry of Finance, at the forum.
Subsidies will gradually be reduced and a new energy credit policy introduced, according to Song.
On June 13, the MIIT released a policy document for public opinion on fuel consumption control and new energy vehicle credits, requiring auto-makers to meet a new energy credit ratio of 8 percent in 2018, 10 percent in 2019, and 12 percent in 2020, to ease pressure on energy and environment. Xin confirmed that the policy would be put into effect in the near future.
He said the time period up to 2025 will be critical for the auto industry. Energy-saving and emission reduction requirements are increasing, the development of new energy vehicles is becoming more technically demanding and intelligent vehicles are expected to have a profound effect on the industry.
Both the UK and France have already announced plans to ban new diesel and petrol vehicles by 2040, as part of efforts to reduce pollution and carbon emissions.
Chinese-owned car maker Volvo had already said all its new car models would have an electric motor from 2019. Geely, Volvo’s Chinese owner, aims to sell one million electric cars by 2025.
Other global car firms including Renault-Nissan, Ford and General Motors are all working to develop electric cars in China.
Automakers are jostling for a slice of the growing Chinese market ahead of the introduction of new rules designed to fight pollution.
China wants electric battery cars and plug-in hybrids to account for at least one-fifth of its vehicle sales by 2025.
The proposals would require 8% of automakers’ sales to be battery electric or plug-in hybrids by next year, rising to 12% in 2020.
Xin predicted the change would create “turbulent times” in the industry.
The shift will also have a knock-on effect on oil demand in China. The country is currently the world’s second-largest oil consumer after the U.S