China has modified its plans for the future of electric vehicles, which China calls "new electric vehicles" or NEVs. It now wants one out of every four vehicles sold in the country to be NEVs by 2025 despite a massive plunge in sales of these energy-saving vehicles this year.
China's previous target was one in five vehicles. NEVs consist of battery electric vehicles (BEVs) and hybrid electric vehicles (HEVs).
The Ministry of Industry and Information Technology has presented a draft proposal saying China should seek to ensure one in four of all vehicles sold in 2025 are either BEVs or HEVs. The previous target set in 2017 called for 20 percent of cars sold to be NEVs by 2020.
The proposal is meant to ensure China meets its air pollution targets while reducing China's excessive dependence on imported oil. The United States is now the world's largest oil producer, displacing Saudi Arabia.
In addition, China will also continue to develop electric vehicle battery technologies, improve infrastructure for hydrogen fuel cell vehicles and driverless cars.
China is the largest world market for NEVs but sales this year have fallen off a cliff and face a tough road back, thanks to the government slashing its NEV subsidies.
NEV sales plunged 45% in October year-on-year and 34% in September, according to the China Association of Automobile Manufacturers (CAAM), which also predicted lower NEV sales for 2019 compared to 2018. October was the fourth straight month of falling NEV sales.
"Because of the insufficient demand of the domestic market, the pressure for automakers to upgrade their technology to the national standard, and the major subsidy cuts for new energy vehicles, the recovery of production and sales is still limited," said Chen Shihua, CAAM assistant secretary general. "Based on the current developing trend, we may see negative growth for new energy vehicles this year."
BYD, one of China's top NEV makers, admited to an 89% plunge in net profit for the third quarter. It blamed its plummeting sales on "the considerable reduction" in government subsidies. NIO, once hailed as China's answer to Tesla, Inc., also blamed its lower sales on the lower incentives.
The incapacity of domestic NEV firms means foreign car makers such as Tesla, Volkswagen and BMW are now expected to play a larger role in achieving China's plan to have one in four vehicles on its roads by 2025 as NEVs.
In 2018, annual car sales in China fell for the first time since the 1990s. Passenger vehicle sales have now fallen for 15 consecutive months, according to CAAM.
