China Redefines Hybrid Cars To Ease Green Credit Pressure On Auto Makers

Auto makers in China have a mammoth task of meeting pre-specified environment quota. The practice takes into account the number of both green and IC engine vehicles manufactured by them. A new policy by China now makes it easier for the auto makers to meet this quota.

On Monday, China re-classified petrol-electric hybrid vehicles under this scheme. As per the new classification, petrol-electric hybrid vehicles are defined to be "low fuel consumption passenger vehicles." Thanks to this, the OEMs will now be awarded much less negative points for making such hybrids than petrol or diesel only vehicles.

Note that the hybrid vehicles will still incur negative points. That is because such vehicles use fossil fuel to run and hence have a tendency to cause air pollution. Their emissions, however, are much less than pure IC engine vehicles and hence the Chinese government understandably wants to push their use.

The impact

(Representative Image: Reuters)

The simple move can prove to be a big push towards hybrid vehicles in the country. Hybrid vehicles eventually consume much less fossil fuel than their petrol/ diesel engine counterparts. An increased use of such vehicles over regular IC engine makes can correspondingly reduce the vehicular emissions in the country fighting extreme levels of air pollution in its major cities.

As for the OEMs, manufacturing such hybrid vehicles would come as a relief. In order to keep their green credit up in the country, car makers had to bring pure electric vehicles in the market. Such vehicles usually demanded a lot of investment with a dodgy promise of a return on a large scale.

Hybrid vehicles, on the other hand, will be much more viable for production. In addition, there demand in the market is constant, as there is no shift to a completely new platform that has its pros and cons, and associated anxiety.

Fixing the system

A BYD F3DM (Dual Mode) hybrid electric car is seen outside its headquarters in China's southern city of Shenzhen. (Image: Reuters)

The points system employed by China has been criticised over the time for strict, borderline considerations. The system hands down negative points for each fossil fuel vehicle produced and offers plus points for every new-energy vehicle. There was now incentive for improving the fuel efficiency of the vehicles.

That was, until now. With the new policy published on Monday by China's Ministry of Industry and Information Technology, automakers will be (sort of) rewarded for making petrol-electric hybrids instead of pure petrol/ diesel cars. For now, they won¡¯t have to make up for as many negative points with their production.