Shanghai (ZXZC)- The dual-credit policy for passenger vehicle companies went into force on Apr. 1. The scheme targets automakers who produce more than 30,000 vehicles annually. Automakers who sell passenger vehicles (including the imported passenger vehicles) in China will be examined in terms of average fuel consumption credits and new energy vehicle credits. Automakers who fail to achieve the required credits will be fined.

As stipulated in the policy, automakers should produce proportional NEVs in accordance with the sale volume of fuel-powered vehicles they produced. The policy will compel most automakers to manufacture NEVs. The dual-credit policy is much relevant to the fuel consumption. That means the longer the range is and the lower the fuel consumption is, the higher the credits are. 

Currently, China-branded NEVs take up more than 90% of the Chinese NEV market. To meet the requirements of the dual-credit policy, some foreign-funded automakers started to establish JVs to counter the challenges from their competitors, such as Daimler and BAIC BJEV, Renault-Nissan Alliance and Dongfeng, Ford and Zotye, BMW and GWM. Forced strongly by dual-credit policy and with the increasingly relaxing governmental surveillance on NEV investments, more similar JVs and M&A may take place.

Regarding the impact of the policy to customers, the implementation of the dual-credit policy will encourage automakers to produce more NEVs and NEVs will see improvement in quality and reduction in prices. This will benefit the customers a lot.