SHANGHAI -- The Ministry of Industry and Information Technology last week posted on its website a reply to a proposal from the National People’s Congress, China’s parliament. That proposal suggests the ministry set a time frame to end sales of gasoline-powered vehicles.
The response has prompted many to speculate that China may phase out fossil fuels as a primary source to power vehicles in the not-too-distant future.
That’s a misreading. Neither the ministry, which regulates China’s automotive sector, nor any automaker is ready to stop conventional vehicle sales any time soon.
The ministry says it may consider allowing experimental no-go zones for conventional vehicles. But its main point is clear: It won’t rush to draft a timetable to ban sales of such vehicles.
The key message was made evident in the beginning of the reply.
After reviewing recent robust sales of electrified vehicles -- or new-energy vehicles, as they are called in China -- the ministry quickly states: “While supporting the development of new energy vehicle industry, our country has also placed strong emphasis on the development of energy saving vehicles and insisted on well-concerted development of energy saving and new energy vehicles.”
In China, energy-saving vehicles refer to hybrids and fuel-efficient conventional vehicles.
The ministry says that before drafting a time frame to phase out fossil fuel vehicles, it needs to engage other government agencies to carry out a thorough review and weigh electrified vehicles against conventional vehicles in technology development costs, fuel economy and market demand.
In other words, Chinese regulators are far from ready to halt conventional vehicle sales.
What about provincial governments and automakers?
Among the 31 provinces and provincial-level municipalities and minority regions in mainland China, only the island province of Hainan in south China has set a deadline for stopping conventional vehicle sales.
In March, Hainan, a popular summer resort for Chinese tourists, announced that it would ban sales of vehicles running on fossil fuels in 2030.
Among automakers, two state-owned Chinese companies -- Changan Automobile Co. and BAIC Motor Co. -- seem to be out front in efforts to phase out conventional vehicles.
But a closer look at what they have said reveals neither is ready to abandon such vehicles.
In October 2017, Changan announced a plan to stop producing fossil fuel vehicles in 2025, shocking investors. A few days later Changan clarified that the plan would not apply to energy-saving vehicles such as those with 48-volt electrical systems.
Two months later, BAIC disclosed plans to phase out conventional vehicle output by 2025. But the plan also has exceptions -- it will continue to build fossil fuel SUVs for military use and other vehicles for special purposes beyond 2025, the company said.
Behind generous government subsidies and other incentives, such as free license plates for EVs and plug-in hybrids, China has become by far the largest electrified vehicle market.
In the first seven months, aggregate sales of EVs and plug-in hybrids surged 41 percent to approach 700,000.
But it is a small number in a market in which 14.1 million new vehicles were delivered during the same period.
To ease fiscal burdens on government budgets, Beijing is set to wind down the subsidy program for EVs and plug-in hybrids at the end of 2020 after making a major cut in the subsidies in June.
A somber-minded government would choose not to bar conventional vehicles from sales in the world’s largest new-vehicle market.
One can rest assured that fossil fuel vehicles, especially gasoline cars, will continue to take a lion’s share of the market in the foreseeable future.