BEIJING – In a bid to boost domestic consumption of consumer products and in particular new energy vehicles, the National Development & Reform Commission (NDRC) has released another set of measures less than six months after it released the Implementation Plan (2019) to Further Optimize Supply and Drive Stable Consumption Growth to Promote the Formation of a Strong Domestic Market to revitalize the weakening economy.
While the Implementation Plan to Promote the Upgrading of Key Consumer Products and Recycling of Resources (2019-2020) jointly released by NDRC, the Ministry of Ecology & Environment and the Ministry of Commerce on June 6 covers automobiles, home appliances and consumers electronics, it is heavily focused on NEVs.
The cost of NEV production will be substantially lowered and the research and industrialization of the new generation of NEV batteries accelerated, according to the Plan. Local governments are strictly prohibited from imposing any restrictions on the consumption and use of NEVs, and places where restrictions currently exist should be lifted. It also encourages local governments to give support for the purchase of first NEVs by families who do not yet own a car, reduce parking fees for NEVs in regions where favorable conditions exist and explore possibilities to establish zero emissions zones.
The Plan also prohibits the introduction of new purchase restrictions on automobiles throughout the country and regions where such restrictions currently exit should accelerate transition toward encouraging the appropriate use of vehicles instead of restricting their purchase based on traffic conditions, pollution control requirements and traffic administration effects. Local governments should study and explore the establishment of congestion zones where vehicles are categorized differently and in principle there should be no purchase restrictions outside the congestion zones.
Measures should also be adopted in key air pollution control regions to encourage the elimination, upgrade or export of commercial diesel trucks that meet China 3 emissions standards or below via financial subsidies, restricting operation or strict supervision on emissions. The elimination of old and used natural gas vehicles that use lean burn technology or are refitted from gasoline vehicles should also be accelerated.
Urban public vehicles including public transport buses, environmental sanitation vehicles, postal vehicles, taxis, commuter shuttles and light logistics vehicles should speed up their electrification efforts and by the end of 2020 NEVs or clean energy vehicles should account for at least 80 percent of these vehicle fleets in key air pollution control regions.
Upgrading of vehicle consumption in rural areas should be promoted through offering relevant subsidies for trucks of 3.5 tons or below and passenger vehicles of 1.6L and below in regions where conditions are available. Prefectural cities where conditions are available should speed up elimination of restrictions on the use of pickups, while vehicle remodification administration mechanism and technology standards should be perfected to promote their healthy growth. Long-term, short-term and time share rental leasing methods should be encouraged to form a diversified automobile consumption system.
The Plan reiterates determination to implement State Council’s call to boost simplicity of used vehicle transaction and eliminate restrictions on interregional transaction of used vehicles, speed up drafting of the new Administrative Methods on the Circulation of Used Vehicles, push ahead the cross-departmental sharing of used vehicle transaction information and strengthen the formation of credit system. Measures to supply financing services catered specifically to prefectural cities and rural areas as well as establishment of shared, economic and social vehicle distribution systems are also encouraged. Charging infrastructure will be expanded through constructing charging equipment in existing parking lots where they account for no less than 10 percent of the parking spots.
The Plan has one entire section dedicated to recycling and scrap of consumer products including those of motor vehicles and components. The recyclability and ease of disassembly of vehicle products should be enhanced and the supervision of flow of these products should be strengthened. The establishment of standards and administration documents on the remanufacturing of automotive components should also be accelerated.
The Plan comes out just four days after Guangzhou and Shenzhen issued new policies giving the two tier-1 cities 100,000 and 80,000 units in additional vehicle quota from June 2019 to December 2020 to boost consumption. Beijing and Shanghai, the other two tier-1 cities where vehicle purchase restrictions are in place through either license plate auction or lottery, have yet to announce any measures but something could be on the horizon now that the Plan has come out.
China sold 360,000 NEVs in the first four months of this year, up 59.8 percent from the same period a year earlier. The Plan is likely to help the sector maintain that momentum through to the end of 2020, when NEV subsidies are completely phased out.