The Six Major Policy Directions for New Energy Vehicles That You Must Watch

The 2017 “Blue Book on New Energy Vehicles,” released on August 3, outlined six major policy directions. Among them are: the National Development and Reform Commission and the Ministry of Industry and Information Technology will raise the investment threshold for newly established pure electric vehicle projects; it remains highly likely that the exemption of purchase tax for new energy vehicles will continue in 2018; overly stringent policies such as the 30,000-kilometer requirement will be adjusted and refined; and the dual-credit management measures are expected to be introduced in the second half of this year.

30,000-kilometer policy and new-energy vehicle policies

The Blue Book points out that the development momentum of the new-energy vehicle industry is now irreversible. On the basis of ensuring steady growth in the new-energy vehicle market, policies may be adjusted to reflect the characteristics of the industry’s new stage. Government departments will continue to study and refine relevant policies, and it is expected that significant policy adjustments—covering areas such as investment, taxation, subsidies, and industry regulation—will be gradually introduced over the coming year.

Gradually raise the investment threshold. Currently, the focus of investment approval lies on companies’ R&D experience, R&D capabilities, financial strength, and capacity for sustainable development. It is expected that in the next step, the National Development and Reform Commission and the Ministry of Industry and Information Technology will further raise the investment threshold for newly established pure electric vehicle enterprises. While continuing to tighten requirements in areas such as corporate R&D, local governments will also intensify their efforts to regulate industrial development. As a result, it is anticipated that it will become more difficult for newly applying enterprises to obtain approval; however, companies with strong technological capabilities and a commitment to sustainable development will continue to enter the market.

The research suggests continuing tax incentives. The exemption of purchase tax for new-energy vehicles, which was set to expire at the end of 2017, is likely to remain in place in 2018, given the national government’s strong support for new-energy vehicles as a strategic emerging industry. This will help ensure that the government’s support remains consistent and uninterrupted. To achieve the goal of supporting high-quality and strong enterprises, new-energy vehicles eligible for the purchase-tax incentive will also face higher technical standards. Given that both the purchase-tax incentive catalog and the subsidy catalog for new-energy vehicles are led by the Ministry of Industry and Information Technology, these two catalogs may be unified, thereby reducing the administrative burden on enterprises when applying for inclusion in the catalogs.

Continue to refine the subsidy policies. Before 2020, the subsidy policy for new-energy vehicles will not be withdrawn lightly; however, the policy needs to be adjusted and improved gradually to keep pace with evolving circumstances. On the one hand, as the technological level of the industry continues to improve, we will further study ways to raise the entry barriers for enterprises and products, and strengthen online monitoring of the sale and use of new-energy vehicles. On the other hand, to ease the financial pressure on enterprises and avoid unintended negative impacts on industry development caused by a one-size-fits-all approach, overly stringent policies such as the 30,000-kilometer threshold will also be adjusted and refined, and the frequency of clearance checks may be increased.

The points-based management system should be introduced as soon as possible. After more than half a year of revision and refinement, the “Management Measures for Fuel Consumption and New Energy Vehicle Points of Passenger Vehicle Manufacturers” are expected to be released in the second half of this year, with efforts being made to implement them starting in 2018. However, given that managing this system will be far more challenging than administering subsidy policies, during the subsidy era before 2020, China’s new energy vehicle sector will continue to rely primarily on subsidies and tax incentives. The new energy vehicle points management system will serve as a supporting tool during this period. After 2020, the points system will take over from the subsidy policy and play an effective role in providing supply-side support for the long-term, sustainable development of the industry.

Strengthen supervision during and after the event. The occurrence of subsidy fraud incidents has also prompted regulatory authorities to place great emphasis on managing product production consistency, vehicle registration, and usage. As a result, industry regulation will shift from focusing primarily on pre-event management to placing greater emphasis on management during and after the event.

Guide and standardize intelligent connected vehicles. Existing laws and regulations were primarily designed for conventional automobiles, and legal provisions specifically addressing intelligent connected vehicles are still being explored and formulated. It is recommended that the next step in promoting the development of intelligent connected vehicles should focus on four key areas: revising relevant regulations, tackling technological challenges, conducting demonstration and pilot programs, and strengthening coordination. At the same time, it is essential to enhance coordination and interaction among sectors such as the automotive industry, the transportation sector, and the information technology industry.