China's ‘dual-credit' policy that spurred the EV sector will be revised in bid to ensure high quality growth

electric vehicle, trading “regulatory credits”

China’s decision to revise a “dual-credit” policy on carbon emissions that helped electric vehicle (EV) makers boost production is likely to hurt the industry leaders in a trade-off for long-term quality growth, market observers said.

The policy, first implemented in 2018 based on California’s zero-emission vehicle programme, penalises companies that fail to meet the fuel consumption targets of their vehicles. Conventional carmakers are subject to production quotas if they are unable to report positive credits. They are, however, allowed to buy credits from other makers to make up any deficit.

“The revised policy is expected to ease pressure on [conventional] carmakers to meet their targets while denting EV companies’ sales of credits,” said Gao Shen, an independent analyst in Shanghai. “As conventional carmakers ramp up production of EVs, they may no longer need to buy a lot of credits in the coming years.”

The Ministry of Industry and Information Technology (MIIT) said last week that it will reasonably set subsequent annual credit ratio requirements and explore the setting up of a flexible mechanism. It did not reveal a timetable for the revision, but underscored the importance of ensuring high-quality development of the EV sector.

According to Fitch Ratings, 71 of the 117 carmakers in China, including Sino-foreign joint venture assemblers, reported negative credits last year.

EV makers have benefited from the policy as the credits earned generate revenue for them. NIO, one of the three leading Chinese smart EV start-ups, raked in 517 million yuan (US$81 million) by selling credits this year. Tesla made US$1.58 billion from trading “regulatory credits” in 2020, helping it record its maiden annual profit of US$721 million.

The EV companies that made a windfall by selling energy credits to conventional internal combustion engine (ICE) carmakers, however, are likely to shift focus from scaling up production to improving profit margins in the fast-growing Chinese market where three out of every five new cars sold in 2030 will be powered by batteries, they added.

“The dual-credit policy has been of great significance to the country’s automotive industry and has been a kind of windfall for the leading EV start-ups,” said Phate Zhang, founder of CnEVPost, a Shanghai-based EV news portal. “An adjustment could have an impact on the industry too.”

Chinese carmakers are on track to deliver 2.4 million NEVs in 2021, more than double last year’s 1.17 million units. Tesla, along with NIO, Xpeng and Li Auto, dominate the premium EV segment in China.

Beijing has set a target of 20 per cent penetration rate for new-energy vehicles (NEVs) – which comprise pure electric, plug-in hybrid and fuel-cell cars – by 2025. UBS forecast that NEVs would represent 25 per cent of total new car deliveries in 2025, buoyed by Chinese consumers’ increasing penchant for battery-powered vehicles.

Hongguang Mini EV, an entry-level vehicle assembled by General Motor’s three-way venture, SAIC-GM-Wuling, is the bestselling model in China. The car that can go 170km on a single charge is priced from 28,800 yuan onwards, a fraction of Tesla’s Model 3 sedan that starts at 255,652 yuan.

While the mini EV has a thin profit margin, it can still generate profit for the joint venture through the credit earned from deliveries of as many as 40,000 units per month.

“Regulators want car companies to move up the value chain to produce more high-performance EVs,” said Peter Chen, an engineer with car components company ZF TRW in Shanghai. “The revised dual-credit scheme should not just encourage production of EVs, but EVs that can compete on the global market.”

News Related

OTHER NEWS

Lab-grown seafood on TU menu Thailand-based global tuna giant wants to take next step beyond plant-based proteins

Crab benedict features plant-based crabmeat from OMG Meat, a TU subsidiary that also makes fish nuggets, seafood burger patties, crab dumplings and dim sum. (OMG Meat Photo In the race ... Read more »

Moneycontrol PRO & Espresso present Nifty Banker 2.0 on Saturday, 29 January, at 8 pm, with Harish Kumar on “Intraday Trading using BN options: For Disciplined Traders”

Nifty Banker 2.0 is India’s First Retail Index Traders Online Conference to be organised in India. Some of the best index traders in India will share their deep trading knowledge ... Read more »

Melania Trump NFT auction failed to reach target bid price

Photo by: Office of Melania Trump Press Release Melania Trump emerged again after stepping down as the First Lady of the United States early last year. She became visible again ... Read more »

Marc Jacobs handed out free $300 bags due to online glitch

Photo by: Laura Chouette/Unsplash Marc Jacobs is one of the well-known luxury brands in the world, and recently, it has given away free bags worth $300 each to shoppers who ... Read more »

Mondelez Mulls More Price Hikes as Inflation Eats Into Profits Oreo maker says supply chain is biggest challenge; 'It's all out of whack'

Higher prices for Oreo cookies, Triscuit crackers and other snacks haven’t so far deterred U.S. shoppers. Mondelez International Inc. said higher prices for its snacks weren't enough to make up ... Read more »

Don Julio, Crown Royal Maker Is Running Low on Booze That Takes Years to Make Owner of Crown Royal whisky faces shortages resulting from high demand during the pandemic

The world's largest spirits maker is running low on some of its products. Diageo PLC said soaring pandemic demand is depleting stocks of Crown Royal whisky, Lagavulin Scotch and Don ... Read more »

McDonald's misses earnings estimates due to rising costs, pandemic woes

Photo by: Vijaya Narasimha/Pixabay McDonald's fell short of its revenue, and profit estimates, and the company cited rising costs and low sales turnout in its more than 4,500 store outlets ... Read more »

Market extends profit booking for second week even as these nine smallcap stocks gain up to 58%

Market extended profit booking in the second week ended January 28 losing another 3 percent amid high volatility as investors remained cautious on hawkish Fed, rising crude oil price, geo-political ... Read more »

Moneycontrol Pro Weekender | The Budget must build confidence

Dear Reader, This year’s Union Budget is being prepared against a backdrop of extraordinary uncertainty. The IMF’s World Economic Outlook Update talks of a disrupted recovery. It says, “Supply chain ... Read more »

DealShare turns unicorn with $165 million funding led by Tiger Global

Representative image. Social commerce startup DealShare said it has raised $165 million at a valuation of $1.6 billion, giving it the unicorn tag, as the funding spree continues, even as ... Read more »

What is Partygate that may cost UK Prime Minister Boris Johnson his job?

UK Prime Minister Boris Johnson has refused to resign over Partygate and has said that he is waiting for investigation reports to clear the air Partygate? It’s a term used ... Read more »

Burger King may accept Dogecoin after supporting Elon Musk in his crypto proposal to McDonald's

Photo by: uluer servet yüce/Pixabay Burger King may have hinted that it will be accepting Dogecoin soon after it responded to Elon Musk's proposal for McDonald's to take the said ... Read more »

NFT: Johnny Depp selling portrait paintings of Heath Ledger, Elizabeth Taylor as NFTs

Photo by: jodiandbrett/Pixabay Johnny Depp is a multi-awarded Hollywood actor who has been in the entertainment business for almost four decades already. He has been widely recognized as a character ... Read more »

Qatar wants to help Europe with gas but has no ‘magic wand'

Photo: ANP Qatari leader Emir Tamim bin Hamad al-Thani meets with US President Joe Biden on Monday. In addition, he will probably make promises about gas supplies to Europe, in ... Read more »

NTPC Q3 Results Preview: Revenue expected to increase 10-15%, PAT likely to grow 22-25%

State owned utilities company NTPC Ltd (National Thermal Power Corporation Limited) will declare its third quarter results during the day today. Experts expect the country’s largest power producer to report ... Read more »

Trade the events efficiently by knowing what impacts option premium and how: Shubham Agarwal

Options as an instrument first comes to mind when we are in a risky situation, and we want to take a trade. The event of Union Budget is one of ... Read more »

How to have an extra lucky Lunar New Year: red underwear and a loan from the Goddess of Mercy

I burst out laughing when I saw the words “bright red underwear for Chinese New Year” in a promotional email I received the other day. It was as if a ... Read more »

Cryptocurrency Prices Today: Markets continue to swim in green as Bitcoin, Ethereum rise marginally

The global cryptocurrency market capitalisation rose 3.07 percent over the last 24 hours to $1.70 trillion while the trading volume over the same period fell by 7.83 percent to $81.35 billion. ... Read more »

Petrol, Diesel Prices Today on January 29: Check rates in Delhi, Mumbai, other cities

Petrol and diesel prices differ from state to state depending on the incidence of local taxes such as VAT and freight charges. (Representative Image) Petrol and diesel prices remained unchanged ... Read more »

Apple's stock racks up biggest one-day gain since July 2020

(Image Courtesy: Reuters) Apple Inc’s shares rallied nearly 7% on January 28 in its biggest one-day percentage jump in a year and a half after the iPhone maker reported blockbuster ... Read more »

Market extends sell-off in second week; IT, realty worst hit, PSU banks outshine

Market extended the sell-off in the second consecutive (truncated) week ended January 28 amid high volatility due to continued FIIs selling and weak global cues on hawkish Fed stance and ... Read more »

Cardboard could be a game-changer as film and TV industry looks to clean up its act

In an industry that in recent years has been encouraged to reduce its environmental impact, cardboard could be a game-changer. It's 80% cheaper than a traditional wood or MDF set, it has a carbon footprint that's 90% lower, and it's 100% recyclable. Read more »

Nike appoints Ann Miller as new executive vice president

Photo by: Kristian Egelund/Unsplash Nike, the American footwear and sports apparel company, announced it had promoted Ann Miller to be its new executive vice president and general counsel. Her assignment ... Read more »

Apple hits revenue record despite chip supply shortage

Apple reported record $124 billion quarterly revenue on Thursday, despite a global chip pinch and shifting impacts of the pandemic that have weighed down other big tech players. The expectations-beating ... Read more »

High inflation to stick this year, denting global growth

Persistently high inflation will haunt the world economy this year, according to a Reuters poll of economists who trimmed their global growth outlook on worries of slowing demand and the ... Read more »

Wall Street rallies, capping frenetic week with best day of the year

Source: Reuters Wall Street surged on Friday, notching its best day so far in 2022 after another zigzag session, ending a tumultuous week marked by mixed corporate earnings, geopolitical turmoil ... Read more »

Year of the Tiger: MPF members can expect a rebound in Chinese and Hong Kong stocks to boost pension pot, analysts say

The 4.5 million members of Mandatory Provident Fund, the city’s compulsory pension scheme, are likely to see their retirement savings swell as the Year of the Tiger bodes well for ... Read more »

Why people who meditate often make fewer mistakes, and how to get started with meditation and mindfulness practice

We all make mistakes – so the adage goes – but research suggests that those who meditate regularly may make fewer than the rest of us. The study, published by ... Read more »

Cramer's lightning round: Greenbrier Companies is a buy

Loading chart… ThredUp: “See, that's the kind of stuff [that] used to work. An interesting growth clothing exchange. I've just go to tell you [it's a no-go].” Loading chart… Asana: ... Read more »

Jim Cramer's advice for young investors who want to build wealth in the stock market

Jim Cramer on Mad MoneyScott Mlyn | CNBC CNBC's Jim Cramer on Friday issued a plea to young investors who may be new to the stock market and want to ... Read more »

Boot Barn CEO says the retailer's oil-related apparel sales are finally growing after 2-year slump

Boot Barn CEO Jim Conroy told CNBC on Friday the western apparel retailer is finally seeing sales strengthen in its oil-related categories following a prolonged period of weakness. “At least ... Read more »

‘Cheap' Dutch ski instructor remains in demand in Austria

For a town famed for its après ski, there’s not much going on in Austria’s Gerlos this year. Bars are closed, restaurants are not – until 10pm. The Cin-Cin bar, ... Read more »

Amazon accused of threatening New York union

Photo: ANP The US independent government agency, National Labor Relations Board (NLRB), which enforces labor law, has sued e-commerce company Amazon for allegedly threatening and surveilling employees who want to ... Read more »

Cramer's week ahead: Have your buy list ready for any 'hideous moments'

CNBC's Jim Cramer on Friday previewed next week's major corporate earnings reports after Wall Street capped off a wild week filled with major intraday moves for the major U.S. stock ... Read more »

First blizzard warnings in 4 years in effect as East Coast braces for powerful nor'easter

An excavator piles road salt in preparation for Winter Storm Kenan at the Boston Public Works Department yard on January 28, 2022 in Boston, Massachusetts.Scott Eisen | Getty Images The ... Read more »

What price zero Covid? We need to know the cost to Hong Kong

As the Omicron onslaught continues in Hong Kong, undermining the administration’s embattled efforts to stick with its “zero-Covid” tactics, the need is urgent for a rigorous cost-benefit examination of the ... Read more »

Why the Fed is closely tracking this number

The employment cost index is a low-key piece of data — but in recent months it has strongly influenced policy decisions at the Federal Reserve. Read more »

AirAsia eyes 1bn flyers by 2026 Group seeks to become digital travel and lifestyle company

Mr Fernandes, second from right, and company executives announce the name change from AirAsia Group to Capital A in Kuala Lumpur yesterday. AirAsia Group aims to connect more than 1 ... Read more »

Fed signals send shares on a bumpy ride

Recap: Global markets were mixed yesterday after being whipsawed throughout the week as investors reacted to Federal Reserve signals pointing to aggressive monetary tightening, while US GDP data showed surprisingly ... Read more »

Building a digital one-stop shop Bitazza wants to become 'the cryptobank', allowing the easy transfer of assets, writes Nuntawun Polkuamdee

Mr Kavin says the company is preparing to expand to other several digital asset businesses, including digital asset exchange, digital asset management, digital asset trading advisory, and digital asset wallet ... Read more »
On free-english-test.com you will find lots of free English exam practice materials to help you improve your English skills: grammar, listening, reading, writing, ielts, toeic