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Headline Hysteria Suggests Tesla Reversal

Headline Hysteria Suggests Tesla Reversal

There’s been good reason to…

China Bans Sales Of Fuel Inefficient Cars

Chinese car brand

China has banned the sales of 553 passenger car models including local ones and models produced by foreign carmakers, including Daimler and Volkswagen. The reason: these models fail to comply with the new standards for fuel consumption, which is part of a strategy to fight overwhelming pollution.

The carmakers, for whom China has become the single largest market, said there is no reason to worry about a drop in sales, because the models that were banned in China were no longer in production anyway. Deutsche Welle quoted spokesmen for VW and Daimler as adding that all the vehicles they currently produced were in compliance with China’s standards.

Most of the news coming from China right now has been positive for carmakers: recently, Beijing said it will keep the 10-percent tax rebate on purchases of what it calls new energy vehicles (NEV), which include both hybrids and all-electric cars. The rebate will continue to be in effect until the end of 2020 to stimulate more NEV sales.

Yet next year, Beijing will also introduce quotas for NEV supply, which will likely pressure carmakers if predictions of a battery shortage materialize. The quotas are another part of the country’s attempt to tackle pollution and are linked to the annual sales of various car makes.

Related: U.S. Shale Can’t Offset Record-Low Oil Discoveries

If a company sells more than 30,000 cars in China every year, it would have to make sure one-tenth of these are hybrids and battery-powered EVs. By 2020, this will rise to 12 percent of the total annual sales, and by 2025, hybrids and all-electric vehicles should make one-fifth of all car sales in China. Those unable to meet the quota requirements will have to buy credits.

The quota is a small victory for carmakers, though. Beijing’s original plan was much more aggressive, with an eight-percent NEV quota to be introduced this year. Carmakers, however, asked for leniency on grounds that the aggressive quota would be impossible for carmakers to meet.

By Irina Slav for Oilprice.com

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