China looks into fossil fuel cars sales ban and boosts electric vehicle industry

The official Xinhua news agency reported on Sunday that the world’s largest auto market has begun studying when it is going to ban both production and sales of traditional fuel cars, with the Vice Industry Minister talking about “turbulent times” for automakers that will be forced to adapt.

During an auto industry event in the city of Tianjin on Saturday, Xin Guobin, Vice Minister of the Ministry of Industry and Information Technology said that with some countries already having prepared a timeline for diesel sales ban “the Ministry has also started relevant research and will make such a timeline with relevant departments”.

He added: “Those measures will certainly bring profound changes for our car industry’s development”.

Reuters report that China aims to become a leader in the production of electric vehicles worldwide, so the ban will not only contribute significantly towards the country’s air pollution problem, but it will also close the competitive gap between its domestic electric-vehicles market and its global rivals.

The country already aims for electric and plug-in hybrid cars to constitute at least 20 percent of China’s auto sales by 2025.

Mr Xin called on the domestic car makers to adapt to the challenge, and adapt their strategies accordingly.

Today, China is the world’s largest car market with 35.53 million cars and light vehicles sold domestically in 2016.

China is also the largest consumer of electric and hybrid cars.

In 2015, Chinese motorists bought 336,000 electric and hybrid cars, representing 40 percent of global sales.

During the first seven months of 2017, 204,000 electric vehicles were sold in China and Ford has predicted that demand for electric vehicles will reach 6 million by 2025.

The Chinese Government is providing billions in incentives to the automobile industry to become leader in the electric vehicles global industry, and such offers have attracted multiple international car makers to set up joint ventures in the country in collaboration with local companies, - i.e. Renault Nissan, Ford and Volkswagen Group.

Song Qiuling, a Senior Official from the Ministry of Finance, during Saturday’s event warned that if government subsidies that are intended for scaling-up the electric vehicle industry are held for long, they could be abused leading to a “mindless expansion” and excess capacity in the sector.

She added that gradually, such financial subsidies will be withdrawn, and the Government will instead speed up the establishment of a credits accumulation policy to support the industry.