China Looks To Copy California’s Electric Vehicle Incentives

China’s policymakers are working on a new initiative for spurring the usage of green vehicles, taking their cue from measures previously launched in the state of California. According to Xu Heyi, Chairman of Beijing Automotive Group, two schemes are currently being drafted that will seek to incentivize the development or purchase of "new energy" vehicles by both automobile companies and consumers in China.

Under the scheme directed at companies, automakers will receive credits for the production and sale of vehicles that fall under the "new energy" category, which will help them to satisfy stricter requirements with respect to fuel economy. All-electric battery vehicles will receive the highest number of credits, followed by plug-in hybrids and then conventional gasoline-electric hybrids.

Manufacturers of gasoline cars that fail to satisfy new fuel economy standards will also be penalized with a deduction in points. Any surplus credits obtained by the producers of more-energy-efficient vehicles can also be sold off to their underperforming peers, as part of a nationwide credit and trading scheme for shoring up vehicle fuel economy.

A separate scheme directed at consumers also provides potential buyers with direct monetary incentives for selecting more-energy-efficient vehicles. Under the scheme, drivers will receive points that are cash redeemable for every mile covered in a fully electric vehicle. Conversely, drivers will have to pay a premium for distances covered using conventional gasoline cars.

Xu Heyi directly cites California’s experiments with increasing fuel economy as the basis for Beijing’s current proposal. "Relevant national departments are currently studying and drawing lessons from the US state of California’s methods to encourage the use of new energy cars," said Xu.

The inclusion of conventional gas-electric hybrids also marks a departure from convention for Beijing, given the exclusion of such vehicles from previous policies due to the market dominance of Japanese automakers.

Chinese auto giants including BYD and SAIC have recently expanded their production of gas-electric hybrids, meaning that the conferral of credits for such vehicles will also be of benefit to domestic companies.

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