Revisions to China NEV (New Energy Vehicle) Credit Policy

Revised CAFC/NEV credits to be in effect from January 2021: Tesla's credit points rise in 2019

2020/09/16

Summary

新エネルギー車販売台数

  In July 2019, a solicitation for public comments on revisions to the “Corporate Average Fuel Consumption and New Energy Vehicle Credits Joint Management Method Regulation” (also known as the double-credit NEV Credit Regulation, hereinafter referred to NEV Credit Regulation) promulgated in September 2017 was released. In June 2020, five Chinese ministries and government offices (the Ministry of Industry and Information Technology (MIIT), Ministry of Finance (MoF), Ministry of Commerce (MoC), Tax Bureau, and Market Supervision and Administration Bureau) formally issued revisions to the NEV Credit Regulation with effect from January 2021. The main changes include incentives for fuel-efficient passenger cars in addition to New Energy Vehicles (NEVs), the scope of the carry-over of credits, and changes to the method of calculating NEV credits.

  In addition, at the end of June 2020, the FY 2019 credit status of each company was published. BYD Automobile Co., Ltd. (BYD), which has introduced many electric vehicles, was in the top position with high points for both average fuel consumption and NEVs. Among foreign-capitalized OEMs, Tesla (Beijing) Co., Ltd., which handles imported Tesla vehicles, acquired the most credit points.

  This report outlines the revisions to the NEV Credit Regulation released in June 2020 and presents the “FY 2019 Passenger Vehicle Corporate Average Fuel Consumption and NEV Credit Calculation Status Chart”.


Related Reports:

NEV Industry Development Plan: China accelerating the sophistication of the NEV industry (Mar. 2020)
FY 2018 NEV Credit/ Corporate Average Fuel Consumption Credit of OEMs (Aug. 2019)
China NEV Alliances (Aug. 2019)
SAE China 2018:NEV industry and related policies (Jan. 2019)
Electrification, Intelligence, and Drivetrains of China's NEV Market (Nov. 2018)
The current situation of China’s NEV market (Jan. 2018)

 

 

 



Revisions to “Corporate Average Fuel Consumption and New Energy Vehicle Credits Joint Management Method Regulation”

  The decision regarding revisions to the “Corporate Average Fuel Consumption and New Energy Vehicle Credits Joint Management Method Regulation” (NEV Credit Regulation), which was promulgated in September 2017 and took effect from 2019, was announced by five Chinese ministries and government offices: the Ministry of Industry and Information Technology (MIIT), Ministry of Finance (MoF), Ministry of Commerce (MoC), Tax Bureau, and Market Supervision and Administration Bureau on June 15, 2020.
  Already in early July 2019, a solicitation for comments (hereinafter Solicitation for Comments) regarding draft revisions to the NEV Credit Regulation was announced by the MIIT in July 2019, and the regulation released this time can be said to be the final version because it is a “decision to revise”. This revised NEV Credit Regulation announced will take effect from January 2021.
  The main changes from the original NEV Credit Regulation promulgated in 2017 include incentives applicable to fuel-efficient passenger cars in addition to NEVs, inclusion of passenger cars using alcohol and ether fuels in the scope of applicability, expansion of the scope of carry-over credits, changes to the method of calculating NEV credits, preferential treatment for small companies, and some changes for the transfer of credits among affiliated companies.

  The table below summarizes the main changes to the 2017 promulgation of the regulation by these revisions.



Corporate Average Fuel Consumption (CAFC) Credits for Passenger Vehicles

Corporate Average Fuel Consumption (CAFC) Credits for Passenger Vehicles
2017Version Revised Version
Introduction timing 2018 January, 2021
Applicable companies All passenger vehicle manufacturers (or importers) All passenger vehicle manufacturers (or importers) *1
Applicable vehicles Passenger vehicles with gross vehicle weight of 3,500 kg or less Same
Target values 2018: 6.0L/100km
Annual ratio 120%
2021: Annual ratio123% *2 
2019: 5.5L/100km
Annual ratio 110%
2022: Annual ratio 120% *2
2020: 5.0L/100km
Annual ratio 100%
2023: Annual ratio 115% *2
CAFC credit calculation method (Corporate average fuel consumption standard for passenger vehicles – (minus) Actual corporate average fuel consumption for passenger vehicles) x (times) number of passenger cars produced or imported Same
・Standard required of each company = Target value required of each company x annual ratio Same
・For each company, the corporate average fuel consumption standard for passenger vehicles and the actual corporate average fuel consumption for passenger cars is calculated based on Chinese National Standard GB 27999-2014. ・For each company, the corporate average fuel consumption standard for passenger vehicles and the actual corporate average fuel consumption for passenger vehicles is calculated based on Chinese National Standard GB 27999-2019.
・Exported vehicles are not included in the number of vehicles produced.  Same
・The above calculation method does not apply to companies which manufacture (import) fewer than 2000 vehicles. ・For companies which manufacture (import) fewer than 2000 vehicles, the calculation method differs from that mentioned above. In addition, the CAFC credit achievement target values are relaxed.
1) If between 2016 and 2020, the CAFC fuel consumption improves 6% over the previous year, the average fuel consumption achievement target will be relaxed by 60%; if between 3% and 6%, the target will be relaxed 30%.
2) If between 2021 and 2023, the CAFC fuel consumption improves 4% over the previous year, the average fuel consumption achievement target will be relaxed by 60%; if between 2% and 4%, the target will be relaxed 30%.
3) For 2024 and later, the MIIT will promulgate requirements separately.
Credit treatment Positive credit can be carried over to the next year (80% in FY 2018, 90% in FY 2019) or transferred to affiliated companies. Same (partial amendment to the provisions regarding affiliated companies *3)
Companies with negative credit can offset their negative credit scores via transfers from affiliated companies or compensated by either their own NEV credits or with NEV credits purchased from other companies. Same (partial amendment to the provisions regarding affiliated companies *3)
- In 2021 and later years, if the actual CAFC value does not exceed 123% of the target value, NEV positive credits generated in that year can be carried over. For each application of this provision, the carry over rate is 50%.

*1. Manufacturers (importers) with fewer than 2000 vehicles are handled separately.
*2. Use of GB-27999-2019 takes effect from January 1, 2021. The target standard in 2025 is around 4.0L/100km.
*3. Affiliated companies of Article 22, Paragraph 1 are companies which meet any of the following conditions:
(1) A domestic passenger car manufacturer having direct or indirect total shareholding ratio exceeding 25% in another domestic passenger car manufacturer.
(2) A third party having direct or indirect total shareholding ratio exceeding 25% in a domestic passenger car manufacturer.
(3) A domestic passenger car manufacturer having direct or indirect total shareholding ratio exceeding 25% in an imported passenger car supply company which is licensed by an overseas passenger car manufacturer and an overseas passenger car manufacturer; or a domestic passenger car manufacturer having direct or indirect total shareholding ratio exceeding 25% in an overseas passenger car manufacturer.

(Source: Created based on the “Corporate Average Fuel Consumption and New Energy Vehicle Credits Joint Management Method Regulation” )



New Energy Vehicle (NEV) Credits and Calculation Method

New Energy Vehicle(NEV) Credits
2017Version Revised Version
Introduction timing 2019 January 2021
Applicable companies Companies which manufacture or import more than 30,000 passenger cars equipped with internal combustion engines. Same
Applicable vehicles Passenger vehicles with gross vehicle weight of 3,500 kg or less Same
Target values Against the number of passenger cars with internal combustion engines manufactured (or imported),
2019: 10% of production volume shall be NEVs
2020: 12% of production volume shall be NEVs
-
-
Against the number of passenger cars with internal combustion engines manufactured (or imported),
2020: 12% of production volume shall be NEVs
2021: 14% of production volume shall be NEVs
2022: 16% of production volume shall be NEVs
2023: 18% of production volume shall be NEVs
Applicability to low fuel consumption vehicles - ・Passenger vehicles fueled with alcohol or ether shall be included within the scope of applicability of traditional (conventional) energy passenger vehicles.
・Preferential treatment shall be granted to achieving NEV credit target values for the volume of low fuel consumption passenger vehicles  among traditional energy vehicles manufactured or imported.
1) In 2021, 0.5 times the volume of low fuel consumption vehicles manufactured or imported may be applied against the NEV credit target value; in 2022, 0.3 times the said volume may be applied; and in 2023, 0.2 times the said volume may be applied.
2) For 2024 and later, the MIIT will promulgate requirements separately.
Credit treatment - NEV credits may be freely traded, but cannot be carried over beyond three years.
1) 2019 NEV credits can be carried over 1 year only in the full amount.
2) For 2020 NEV credits, the carry over rate is 50% for each transaction.
The carry over rate of NEV positive credits created by companies which manufacture or import only NEVs is 50%.
- In 2021 and later, if the actual CAFC value does not exceed 123% of the target value, NEV positive credits generated in that year can be carried over. The carry over rate is 50% for each transaction.
To offset negative amounts, credits may be purchased from other companies. Negative amounts shall be set to zero using NEV positive credits.
If the 2019 value is not achieved, surplus credits from 2020 may be used to compensate. If the 2019 value is not achieved, surplus credits from 2020 may be used to compensate.
Positive credits generated in 2021 can be used to compensate for negative credits in 2020.
- The MIIT may adjust the 2020 positive credit carry over rate or extend the applicable period of compensation based on the conditions of the automotive industry.

(Source: Created based on the “Corporate Average Fuel Consumption and New Energy Vehicle Credits Joint Management Method Regulation” )



EV Credit x Driving Range Adjustment Factor x Energy Density Adjustment Factor *1 x Electricity Cost Adjustment Factor *2
Maximum vehicle speed must reach 100km/h for 30 minutes
NEV Credit Calculation Method and Credit Grant per Vehicle Driving Range (R) Adjustment Factor
EV mode driving range (R) < 100km 0 R < 100km 0
100km ≦ R < 150km 1 100km ≦ R < 150km 0.7
R ≧ 150km 0.0056 × EV mode driving range (km) + 0.4

Upper limit 3.4
150km ≦ R < 200km 0.8
200km ≦ R < 300km 0.9
300km ≦ R 1
PHV ・GB/T32694 “Technical Requirements of Plug-in Hybrid Electric Passenger Cars – Specifications” must be satisfied.
1. The fuel consumption limit value of individual vehicles corresponding to the fuel consumption of the electric power retention mode test (excluding fuel consumed for converting to electric energy) and GB19578 “Limits of fuel consumption for passenger cars” shall be less than 70%
2. The electric power consumption of the electric power consumption mode test shall be less than 135% of the electric power consumption target value of conventional BEV (battery electric vehicles) passenger vehicles.
1.6 Models which cannot satisfy the indices of items 1 and 2 on the left at the same time shall calculate 0.5 as the standard vehicle type credit. In addition, the credits may be used only within that company.
FCV For Fuel Cell Vehicles (FVC), the driving range shall be at least 300km, and the rated output of the fuel cell system shall be at least 30% of the rated output of the drive motor and at least 10kW. 0.08 x fuel cell system rated output (kW)
Upper limit 6
For fuel cell systems with a rated output of 10kW or more, the credit shall be calculated as 1, for others, 0.5.

Note: PHV passenger vehicles approved before January 1, 2021 and satisfying GB/T32694 “Technical Requirements of Plug-in Hybrid Electric Passenger Cars – Specifications” may obtain 1.6 credits for models manufactured (imported) before January 1, 2023. The specific credit multiplier shall be implemented in accordance with the requirements of PHV passenger vehicles. When calculating the actual NEV credit value of passenger vehicle companies, if there are multiple NEV passenger vehicle credits for the same model in one fiscal year, the actual NEV passenger vehicle points for the passenger car company shall be calculated separately corresponding to the different points.

*1. Energy Density (D) Adjustment Factor
D<90Wh/kg 0
90Wh/kg≦D<105Wh/kg 0.8
105Wh/kg≦D<125Wh/kg 0.9
125≦D 1

*2. Electricity Cost Adjustment factor = model electricity cost target value / electricity cost actual value
m: vehicle mass
Y: target electric power consumption (kWh) to drive 100km
m≦1,000kg Y=0.0112×m+0.4
1,000kg<m≦1,600kg Y=0.0078×m+3.8
1,600kg<m Y=0.0048×m+8.6

Note: The electricity cost adjustment factor shall not exceed 1.5

(Source: Created based on the “Corporate Average Fuel Consumption and New Energy Vehicle Credits Joint Management Method Regulation” )

 

 



2019 Credits Earned: BYD Continues to Dominate, Tesla Doing Well

  According to the “FY 2019 Passenger Vehicle Corporate Average Fuel Consumption and NEV Credit Calculation Status Chart” released by Chinese government authorities at the end of June, 2020, the average mass of passenger vehicles produced by 119 Chinese domestic passenger vehicle manufacturers is 1,416kg and the average fuel consumption (actual value) is 5.53L/100km. On the other hand, the average mass of imported passenger vehicles provided by the 25 companies which import such vehicles is 1,905kg, and the average fuel consumption (actual value) is 6.58L/100km.

  The number of companies which could not achieve the average fuel consumption credit target value was 86, an increase of 11 compared to FY 2018. The company with the most average fuel consumption credit points was BYD Automobile Co., Ltd. (BYD) (formerly Xi'an Qinchuan Automobile Co., Ltd.), which has a plant in Xi’an, Shaanxi Province. The company in the second position was BYD Automobile Industry Co., Ltd., and both companies together had 1,608,129 points. Among foreign-capitalized firms, Tesla (Beijing) Co., Ltd. (Tesla Beijing), which handles Tesla models as a vehicle importer, had 313,463 points. Tesla (Shanghai) Co., Ltd., which started construction of its self-financed Shanghai Gigafactory in 2019 and began deliveries of made-in-China Model 3s from the beginning of 2020, had obtained 5,608 points.

  On the other hand, among the companies earning a high number of NEV credit points, most of the top 10 are Chinese companies. The only foreign capitalized firm in the top 10 was Tesla Beijing. The number of cars it imported was 46,996, which is not so many, but its number of tradeable NEV credits at 271,282 is about 8000 points higher than Anhui Jianghuai Automobile Group Corp., Ltd. (JAC) which has annual production of 125,000 vehicles. Tesla Beijing, on average, obtains 5.8 NEV credit points for each vehicle.

  In this report, MarkLines has graphed the net value of credits earned in FY 2019 only (excluding carry over points) based on the “FY 2019 Passenger Vehicle Corporate Average Fuel Consumption and NEV Credit Calculation Status Chart”.

  The net values are seen to be polarized just as in FY 2018 with most of the top performers being Chinese companies. Just as in the previous year, the top 2 positions in terms of both accumulated positive average fuel consumption credits and NEV credits are BYD Automobile Co., Ltd. and BYD Automobile Industry Co., Ltd. Zhejiang Haoqing Automobile Manufacturing Co., Ltd., a member of the Geely Group, was in the top 10. Among foreign capitalized firms, Tesla (Beijing) Co., Ltd., a vehicle importer, had both high average fuel consumption credits and NEV credits. Among foreign capitalized joint ventures, Tianjin FAW Toyota Motor Co., Ltd. (Tianjin FAW Toyota) had zero NEV credit points but it earned 268,164 average fuel consumption credits. The positive average fuel consumption credit points can be transferred to affiliated companies. In other words, the negative average fuel consumption credits of Sichuan FAW Toyota Motor Co., Ltd. can be compensated by the positive portion of Tianjin FAW Toyota.

  In July 2020, NEV promotion activities were announced by MIIT and two other Chinese authorities as part of the country's strategy to promote rural areas. In the period from July through December, 2020, incentives will be offered to Chinese domestic manufacturers of small electric vehicles (as stipulated by the government).

 


(Click twice on the graph to enlarge it. For printing, click on the graph to enlarge it, then adjust as needed.)

 

 

 

 



Comparison of 2018 and 2019 Credits

  The table below provides a summary of the “FY 2018 Passenger Vehicle Corporate Average Fuel Consumption and NEV Credit Calculation Status Chart” (released June 28, 2019) and the “FY 2019 Passenger Vehicle Corporate Average Fuel Consumption and NEV Credit Calculation Status Chart” (released June 30, 2020) focusing mainly on credits.

(To print the table, click on the image below and set it to 100% in the transition page before printing.)

Note: Blue color denotes Chinese domestic passenger vehicle manufacturers, orange denote passenger vehicle importers.

Created by MarkLines based on “FY 2018 Passenger Vehicle Corporate Average Fuel Consumption and NEV Credit Calculation Status Chart” (released June 28, 2019) and the “FY 2019 Passenger Vehicle Corporate Average Fuel Consumption and NEV Credit Calculation Status Chart” (released June 30, 2020).


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Keywords:
China, New Energy Vehicles, NEV, electric vehicle, EV, PHV, HV, fuel cell vehicle, FCV, low fuel consumption vehicle, VW, Daimler, BMW, Nissan, Toyota, Honda, Hyundai, GM, Ford, Geely, SAIC-GM-Wuling, BYD, Tesla, First Auto Works, FAW, Dongfeng, SAIC, BAIC, GAC, Changan Automobile

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