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China's New Clean Car Rule Is Great News For Its Automotive Industry

China has made life a little easier for car manufacturers who make gasoline-electric hybrids by reclassifying these hybrid vehicles more favorably with regard to its clean car policies.

Reuters reports that the Chinese Ministry of Industry and Information today published a new policy that will allow carmakers to manufacture more gasoline-electric hybrids and fewer plug-in EVs, which are more expensive. The allowance will be in effect for the period between 2021 and 2023.

This should provide some breathing space to carmakers in China, previously pressured by the country’s strict anti-pollution program. Under the program, carmakers are obliged to manufacture a certain number of so-called new energy vehicles to offset the emissions their other cars generate. By producing such new energy vehicles, or NEVs, carmakers score points to counter negative points they earn for the emission-generating cars.

Under the new policy, gasoline-electric hybrids have been reclassified as “low fuel consumption passenger vehicles.” This means that they will carry a lower negative point score than full gasoline cars. This should motivate them to manufacture more hybrid vehicles. The biggest producers of gasoline-electric hybrids are Toyota and Honda, as well as Chinese Geely and Guangzhou Automobile Group.

Related: Oilfield Services May Not Recover Until 2023

Meanwhile, Beijing is not neglecting its EV plans. The government earlier this month launched an EV credit trading system aimed at stimulating a faster shift from internal combustion engine cars to EVs.

The system basically requires drivers to track their emissions-related behavior. The fewer emissions their vehicle produces, the more credits they earn. Then they can trade these for cash to other individuals or businesses.

Despite the political support, EV sales in China last year fell because Beijing began to phase out subsidies for them. This year, the decline in EV sales will be global, as one of the consequences of the pandemic that locked down most of the world.

By Irina Slav for Oilprice.com

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