China Prohibits Diesel And Gas Car Production After 2040

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May. 13 2019, Updated 4:36 p.m. ET

China has joined other countries in setting a deadline to stop making vehicles with an internal combustion engine. No date has officially been announced, but it’s expected to come after the 2040 mark. This latest move looks to be the end goal after designating multiple goals for zero-emission vehicle sales in the upcoming years.

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Xin Guobin, China’s Vice Minister of Industry and Information Technology, announced on Sunday that they’re working on a guideline to eliminate the production of fossil-fueled vehicles. The United Kingdom and France have announced that by 2040, any production of vehicles with an internal combustion engine would be prohibited. It’s a significant goal to set in any stretch as China holds the world’s largest market share of vehicles. 

Lui Zhijia, an assistant general manager at Chery Automobile Company, told Bloomberg that China’s deadline won’t happen that quickly, explaining, “The implementation of the ban for such a big market like China can be later than 2040. That will leave plenty of time for everyone to prepare.” 

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Chery has been a part of the low-cost electric vehicle revolution in China. They released the eQ at approximately $8,655 US after subsidies last year. According to McKinsey and Company, China produced 375,000 electric vehicles, or 43 percent of the worldwide market share, last year. Sales have ticked up on these EVs, thanks to these grants.

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While these incentives have helped the industry, they won’t be around for a long time. As manufacturers create more EVs in the future, those subsidies will be replaced by energy credit. This is similar to what’s happening with solar panels, eliminating the need of these discounts and instead paying people back for energy they send back into the grid.

Automakers are rapidly announcing new electric vehicles thanks to China’s zero-emission sales deadlines. The country requires eight percent of company sales to be EVs that meet their standards by the end of 2019, delayed from its original goal of 2018. They will need to reflect a fifth of their total sales by 2025. Ford announced that they will be bringing out a new fleet of fully electric vehicles exclusively in China.

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Tesla is another company that could be ready to manufacture vehicles in China. If the company builds a new Gigafactory in Shanghai, they would avoid a 25 percent import tax by creating the EVs locally. Demand is finally there after a rough start, as China represents 14.2 percent of the company’s total revenue in 2016.

Some countries, like Norway and the Netherlands, are wanting to put an end to ICE vehicles even before 2040. That doesn’t seem like a viable option for China with how many of them they produce annually, but the constantly rising zero-emission goals will guide manufacturers while helping curb smog problems these urban areas face.

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