China to Relax Quotas for German E-Cars

New Chinese rules on e-car sales threatened to hit a lucrative market for German carmakers, but after high-level talks, both sides have reached a compromise: a sure sign that Berlin and Beijing are keen to strengthen ties in the face of protectionist rhetoric in the United Staes.

Published on 27. February 2017, 02:52

Why it matters

The deal to lessen the impact of Chinese e-car quotas on German manufacturing will boost German companies at a time they are worried about the possibility of losing business in the United States.

Facts

According to a Chinese government plan, 40 percent of all Chinese cars should be electric by 2030.

This will require 15 million new electric cars to be sold annually.

China published planned new rules in September, stipulating that a percentage of carmakers' sales would have to be of electric cars but these targets have now been postponed, and softened.

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Germany and China seem to have solved to a key dispute in trade relations. Beijing wanted to impose quotas to force carmakers to sell more electric cars. However, the new rules are now to be eased after German diplomatic and political interventions, Handelsblatt has learned from sources in Beijing and Berlin. They confirm that the introduction of quotas will be delayed by a year and made less strict.

German carmakers are well placed in the Chinese market, especially its premium segment, dominated by Mercedes, BMW, and Audi. So the new rules, announced in September, hit German automakers particularly hard: existing state premiums paid to electric car buyers were to be scrapped, and manufacturers were to be given quotas for selling locally-made electric cars: 8 percent of volume in 2018, 10 percent in 2019, and 12 percent in 2020.

That level of e-car sales would be impossible for German manufacturers, who have so far sold only small numbers of Chinese e-cars. The rules set penalty payments for companies failing to meet quotas. There was alarm among German carmakers, with some predicting shuttered production in some factories.

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Why it matters

The deal to lessen the impact of Chinese e-car quotas on German manufacturing will boost German companies at a time they are worried about the possibility of losing business in the United States.

Facts

According to a Chinese government plan, 40 percent of all Chinese cars should be electric by 2030.

This will require 15 million new electric cars to be sold annually.

China published planned new rules in September, stipulating that a percentage of carmakers' sales would have to be of electric cars but these targets have now been postponed, and softened.

Pdf

Source: China to Relax Quotas for German E-Cars