Carmakers remain optimistic despite reduced subsidies

Following the trial implementation of new regulations to further cut emissions, the new energy automobile sector is expected to see healthier development this year, with manufacturers behaving more ethically after ups and downs last year.

The China Association of Automobile Manufacturers foresaw another year of rapid growth for the new energy vehicle industry, and the association's deputy secretary-general Yao Jie said he is "full of expectations" for progress in 2017.

"A rapid growth rate is certainly possible. The Chinese government is promoting the development of the new energy vehicle sector anyway," Yao said on Thursday after a CAAM news conference in Beijing.

"The sector should develop with improved efficiency this year, and grow in a way more in compliance with the government's original intention."

A carbon credit regulation scheme began its trial implementation on Jan 1 as part of a detailed and practical plan to assess the efforts made by automakers in cutting emissions.

The carbon credit scheme calculates the carbon dioxide emissions reduction goal based on analysis of the previous year's carbon dioxide emission. To obtain the credit, an automaker can reduce overall carbon dioxide emissions through producing or importing new energy vehicles and cutting energy consumption in the manufacturing process, according to the scheme.

Those who exceed their carbon emissions goal have to pay a penalty to an agency under the State Council, or purchase credits on the official carbon credit market set to roll out this year. Those who further cut emissions can trade the extra credits for cash on the market.

John Zeng, head of Shanghai-based LMC Automotive Consulting, predicted that the automakers will translate their targets into the new energy vehicle volume produced or sold.

Some carmakers have taken early action to keep up with the nation's plan. Warren Buffet-backed BYD Auto upgraded its electrification strategy in 2016, tapping into seven conventional and four specialized usage fields.

BMW Brilliance Automotive has expanded its new energy vehicle line-up to nine models, including plugin hybrids and fully electric cars, offering the most options to customers. The Sino-German automaker also beefed up its efforts in reducing energy consumption during production. Its Tiexi plant in Shenyang, Liaoning province has realized reduction of water usage by 30 percent, energy usage by 40 percent and emission by 20 percent, according to the company.

The scheme was released in August 2016, six months after the subsidy scandal of February 2016. The central and local governments offered hefty subsidies beginning 2013, which were subject to massive subsidy fraud discovered in 2016.

This year, cash allowance to fully electric passenger cars dropped by 40 percent, in accordance with the fadeout accelerated last year. The central government's subsidy was reduced by 20 percent, while the local scheme is restricted to an amount less than half that of the central government's.

China sold 507,000 new energy vehicles last year with a year-on-year growth rate of 53 percent, according to CAAM data released on Thursday. The fully electric cars registered 257,000 units in sales volume, 75.1 percent more than that of 2015, and contributed more than half of the total new energy vehicle sales in the country.

New energy vehicles are defined in China as fully electric cars, plug-in hybrids and fuel cell cars, but exclude light hybrids without plugs for recharging.