A Paradigm Shift in China - The New Powertrain Mix

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A Paradigm Shift in China – The New Powertrain Mix The Chinese market has been regarded throughout the world as leading the way in electric mobility. However, in the future the Chinese regime will be putting greater emphasis on other types of powertrain. This new trend cannot fail to have an impact on European manufacturers and markets.

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© [M] Volkswagen

CHINA IN A STATE OF CHANGE

Over recent years, China has become the driving force behind the global automotive industry. The country’s huge, flourishing market, combined with almost unbridled consumer spending as a result of its new prosperity, has seen its sales figures constantly rising. Although market growth began to slow in 2018 and 2019, with the numbers of new vehicle registrations well below the previous year, the forecast for the medium and long term, in particular in comparison with the USA and Europe, remains positive. One cornerstone of the Chinese mobility strategy was and still is the electric drive. China has promoted electric vehicles for three different reasons: firstly to reduce its dependency on crude oil, secondly to cut air pollution and thirdly to gain a technological advantage over the gasoline and diesel engines produced by the established markets. The strategy has not yet paid off, at least with regard to the dependency on oil. The country’s economic boom has forced the Chinese government to rely on oil imports since the end of the 1990s in order to satisfy the growing demand for energy. Throughout this period it has been trying in vain to reduce the amount being brought into the country. Currently China imports around 70 % of its oil. Many of the regions that supply oil to China are politically unstable. In the event of a conflict, for example in the Middle East, around 50 % of the oil imports could be put seriously at risk within a matter of only days or weeks. As a result, in the 1990s the regime came up with the idea of generating electricity from domestically produced coal to power electric vehicles. During the years after the decision was made, some initial research and development was carried out and this was followed by a large number of implementation projects. STATE REGULATIONS

At the same time a whole raft of state regulations was introduced. The legislation often did not remain in force for long and was generally amended every six months. The key regulations to emerge over the last few years have been the New Energy Vehicle (NEV) policy and the even more important fleet consumption target or Corporate Average Fuel Consumption (CAFC). The NEV policy is a complex bonus system which involves awarding credits and allows certain vehicles to be counted more than once. Initially, battery electric and fuel cell vehicles, together with plug-in hybrids, were con­ sidered to be compliant with the NEV regulations. “After the bonus system was introduced, it became clear over time that manufacturers were putting too much emphasis on the NEV regulations and that there had been an overall increase in the fuel consumption of vehicles with c