Yesterday, Today, and Tomorrow of China's New Energy Vehicles
——Speech on SMMT Electrified 2022
Fu Bingfeng, Executive Vice Chairman and Secretary-General, CAAM
Dear Mr. Mike Hawes, colleagues, ladies and gentlemen, good morning!
First of all, I would like to thank SMMT for inviting CAAM to share the development of new energy vehicles in China. The content I introduced includes three parts: the key policies formulated for the development of new energy vehicles in China, the future development prospects, and the accumulated experience and lessons.
Here's the first part.
1) Key policies formulated by the Chinese government to encourage and promote the development of new energy vehicles (NEVs)
As the world's largest automobile producer and consumer, China adheres to green development and takes the development of NEVs as a national strategy in the process of industrial transformation. A working mechanism for national government departments, local governments, and industrial enterprises to jointly promote the development of China's NEV industry has been established.
In the past decade, the Chinese government has continued to improve the top-level design to promote the industrialization of new energy vehicles.
In 2012, the State Council officially promulgated the Development Plan for Energy Conservation and New Energy Vehicles Industry (2012-2020), which clearly defined the goals for the development of the industry. In 2013, an inter-ministerial joint meeting led by the MIIT was established. Participating ministries and commissions include NDRC, MOST, MOF, MPS, etc. to jointly coordinate industrial development. Subsequently, local governments issued corresponding supporting policies in combination with the actual situation, including investment management, production access, market supervision, financial subsidies, tax incentives, promotion and use, safety oversight, infrastructure, and so on, which played a positive role in promoting NEVs. In particular, fiscal and tax policies for new energy vehicles continued to be adjusted and improved, and subsidies were extended from pilot areas to the whole nation, covering both the public sector and private vehicles. In 2017, The Parallel Administrative Measures for “Passenger Vehicle Corporate Average Fuel Consumption (CAFC) and New Energy Vehicle (NEV) Credits” (commonly known as CAFC-NEV Dual Credits) was released, which took into account the improvement of the energy-saving level of traditional vehicles and the promotion and application of NEVs, and effectively promoted energy conservation and emission reduction and the accelerated promotion of NEVs. In the past two years, “the NEV Industrial Development Plan (2021-2035)” and the outline of the National 14th Five-Year Plan have been successively issued, put forward the medium and long-term development vision and objectives, systematically planned the future industrial development blueprint and implementation path, and promoted the continuous upgrading of industrial development.
2) From the perspective of CAAM, the development prospect of China's NEV market in the next 3-5 years, especially in the post-subsidy era
China's NEVs have been widely accepted by consumers and have shifted from policy-driven to market-driven. With the rapid application of new technologies and the acceleration of the introduction of new products to the market, the market coverage is gradually moving towards a balanced development from high-end and low-end to middle-end segmentation. In 2022, the sales volume of NEVs is expected to reach 5 million. Further, the sales volume of NEVs is expected to reach 20% of the total sales volume of new vehicles by 2025.
In the post-subsidy era, China will continue to unleash market demand, improve the after-market, explore more business models, adjust and optimize automobile management policies, remove obstacles that restrict purchase and use, gradually lift purchasing restrictions in cities, release automobile consumption potential, and learn from the successful experience of European countries on way open, to create a good environment for NEVs from purchase to use. In recent years, the state has strengthened the infrastructure construction of charging and changing electricity for new energy vehicles, adding charging infrastructure into seven key areas of new infrastructure in 2019. Under the guidance of four ministries and commissions (MIIT, MOFCOM, MARA, and NEA), CAAM has carried out the activities of bringing NEVs to the countryside to promote the consumption of new energy vehicles in small and medium-sized cities and rural areas.
In the medium and long term, the support of ICV technology and the innovation of business models will further promote and popularize NEVs, especially the integration of carbon peak and carbon neutrality goals and "Dual Credits", which will boost the marketization process of China's NEV industry.
3) Key experiences and lessons in the development of NEVs in China
Over the past decade, the Chinese government and enterprises have always regarded the development of NEVs as an important opportunity for industrial transformation. We can reduce our dependence on fossil energy at the national level and vigorously develop green energy. At the enterprise level, we can steal a march on the car market. The combination of the two forms a huge endogenous power. It is precise because of the endogenous power that many problems, which were difficult to solve simply by marketization, have been overcome. For example, in terms of technological innovation, the state has given policy support.
In terms of infrastructure construction, it has also maintained a moderate advance in investment. In terms of market-oriented promotion, the government has given certain subsidies to encourage purchase, and the subsidy has gradually decreased. In terms of industrial policy, the "Dual Credits" has been implemented and gradually increase the weight of NEVs. In recent years, the combination of ICV and electrification has been embraced by users.
Of course, the lessons were also profound. Due to the lack of grasp of the development law of new technologies, there were many problems in the industry in the process of development, such as excessive investment by enterprises, resulting in overcapacity, immature technology of NEVs developed in the initial stage, resulting in many fire accidents, which influenced consumers’ confidence. The subsidy policy lacked complete technical means, and a few enterprises cheated on subsidies, which affected the regular enterprises to obtain due subsidies in time. The "Dual Credits" policy lacked flexibility, resulting in large fluctuations in the trading price of points so that it could not be expected. The distribution and use demand of charging piles were asymmetric, resulting in the idleness of many public piles, which brought experience difficulties to operators.
In the future, with the rapid growth of the NEV market, there will be bottlenecks in charging facilities. Battery upstream materials will also appear the contradiction between supply and demand, forming market instability. With the increase of scrapped vehicles, the recycling of battery materials will also be an urgent problem to be solved. All these need the joint efforts of global automobile enterprises to make the global automobile enterprises obtain good development in the Chinese market.