The deadline for the automobile dual-credit system is set: the key is to implement the trading mechanism before 2018

In China's parallel policy of "fuel consumption + new energy points", the new energy points trading market is a vital part of this policy system. New energy positive points are used as a supplier to meet the requirements of negative fuel consumption points and negative new energy points.

Since June, a large number of automobile-related industry policies have been introduced.

On June 13, the Legislative Affairs Office of the State Council issued the "Measures for the Parallel Management of Passenger Car Enterprises' Average Fuel Consumption and New Energy Vehicle Credits (Draft for Comments)" drafted by the Ministry of Industry and Information Technology, which immediately aroused the sensitive nerves of the automobile industry.

On the 18th, a reporter learned from interviews with many industry insiders that there are certain differences in the industry regarding the points policy: some people argue that the implementation of the points policy should allow companies to leave time to prepare, and the current time is too tight and it will be very difficult to implement; the opposing view is that the management measures were introduced last year, and some car companies only cared about their immediate interests and did not make timely adjustments.

In this regard, an industry insider who has studied automobile industry policies for many years said in an interview with a reporter from 21st Century Business Herald: "With two points systems running in parallel, it is difficult for not only multinational companies but also all traditional fuel vehicle companies in China to meet the standards. Although the domestic points policy was introduced last year, it is only a draft opinion and has not been enforced, and the objective conditions for the implementation of the draft opinion are not sufficient. For companies, there is a lot of uncertainty in investment decisions, and no company dares to invest rashly."

At present, the new energy credit policy is led by the Ministry of Industry and Information Technology and the National Development and Reform Commission respectively, but it is still uncertain which management method will be used to manage the domestic new energy vehicle market in the end. "Whether it will be coordinated and unified, or carried out separately" has triggered a lot of discussion among industry insiders, and also caused some confusion for domestic automakers in their layout in the new energy vehicle market.

"Judging from the current points policy, the domestic government has not yet effectively solved the problem of 'multiple management' in the automobile industry. Although the original intention of the two departments in formulating policies is to promote the development of electric vehicles, the issued points policy management methods and the future division of labor between departments still need to be coordinated and unified." On the 18th, Wang Binggang, leader of the National 863 Energy-Saving and New Energy Vehicle Major Project Supervision and Consulting Expert Group, said in an interview with a reporter from 21st Century Business Herald.

In fact, the release of the points policy was first released by the National Development and Reform Commission in August last year, and the draft for comments on the points policy was finally drafted by the Ministry of Industry and Information Technology and released by the State Council Legislative Affairs Office. Earlier, there were also reports that the German government, on behalf of German automobile companies, had coordinated with the Chinese government, hoping to postpone the implementation. Now it seems that the Chinese government is very determined to implement the new energy points system.

The above-mentioned industry insider mentioned: "Automakers do not oppose the points policy launched by the state, but we need to consider the development status of most automakers and whether they can adapt to policy changes in a short period of time."

In any case, it is certain that competition in the new energy vehicle market will become more intense in the future. On the 18th, Zhang Yong, deputy general manager of BAIC New Energy Co., Ltd., said in an interview with a reporter from 21st Century Business Herald that "in order to meet the points ratio requirements, a large number of products from multinational companies will quickly flood into the market, squeezing the living space of domestic brands, which will indeed bring great pressure to domestic brands."

“Dual points parallel management” is difficult

As early as last August, the National Development and Reform Commission issued the "New Energy Vehicle Carbon Quota Management Measures" (draft for comments). One month later, on September 22, the Ministry of Industry and Information Technology announced the "Interim Measures for the Parallel Management of Enterprise Average Fuel Consumption and New Energy Vehicle Credits" (draft for comments). In June this year, the Ministry of Industry and Information Technology updated the draft for comments again. It is worth noting that in the latest draft for comments, the specific price and trading mechanism of credits have not yet appeared.

In terms of the requirements for the points ratio, both versions of the draft for comments point out that from 2018 to 2020, the new energy vehicle points ratio requirements for passenger car companies' sales vehicles will be 8%, 10% and 12% respectively.

The reporter carefully studied the two versions of the draft for comments and found that the overall management ideas between the two are still the same. The average fuel consumption of passenger car companies in China and the production of new energy passenger vehicles are assessed separately, realizing parallel management of average fuel consumption and new energy vehicle points.

However, the difference between the two versions of the draft for comments is that the wording of some articles is clearer and some articles have been optimized. For example, in Articles 8 and 18 of the first version, the word "in principle" is used for the identification of accounting entities, while in the corresponding regulations of Articles 7 and 18 of the second version, the word "in principle" has been removed.

Although the Ministry of Industry and Information Technology has updated the draft for soliciting opinions on the "double credit policy", the new energy credit trading mechanism has not yet been implemented, and the punishment measures are limited to administrative penalties. Referring to the current difficulty of implementation for domestic enterprises, some industry insiders said that considering the domestic economic development strategy, the new energy credit policy is likely to be compromised and delayed.

At the same time, regarding the requirements for the new energy vehicle credit ratio of passenger car companies, the China Association of Automobile Manufacturers mentioned last year that the actual credit value (estimated) of the new energy vehicle industry is about 3%, and proposed that the credit ratio be adjusted to 5%, 8%, and 12%, which is more appropriate. In addition, there is less than a year left before 2018, and the negative credits in 2018 and 2019 can be deferred for one year. Judging from the new draft opinion released by the Ministry of Industry and Information Technology, the suggestions of the China Association of Automobile Manufacturers were not adopted.

According to the reporter, after the negative fuel consumption points were fully transferred to equity-related companies in 2016, there were still more than 20 companies with negative fuel consumption points. Especially when the fuel consumption standards are becoming more stringent every year, the marginal effect of energy-saving technology is gradually decreasing, and ultimately they have to rely on purchasing new energy points to make up for the negative fuel consumption points, otherwise they will face the risk of announcement, production suspension, etc.

On the 18th, Zhang Junyi, partner of Weilai Capital, said in an interview with a reporter from 21st Century Business Herald: "Although the points policy has set a timetable, it is difficult to implement considering the development status of foreign-funded enterprises and some domestic brands. At the same time, new energy vehicle points can only be traded and cannot be carried forward, while fuel consumption points can be bought, sold and carried forward. The calculation of the two parts is relatively complicated and difficult."

Who will buy the points?

From all indications, the government has released a clear signal that it will further develop new energy vehicles and reduce fuel consumption. Therefore, this year, various ministries and commissions have made more and more adjustments to relevant policies. With the gradual decline of new energy vehicle subsidy policies, fuel consumption points and new energy vehicle points will gradually replace purchase subsidies, which will become an opportunity for the development of new energy companies.

"The double-point policy will encourage traditional automakers to comprehensively deploy new energy industries, and will accelerate the transformation and upgrading of the automobile industry, providing a broader space for the development and promotion of new energy vehicles," said Zhang Yong.

However, except for a few domestic brands such as BAIC and BYD that have made early arrangements in the new energy field, most domestic brands are still facing great pressure of negative points. Take Great Wall Motors as an example. Since Great Wall Motors focuses on high-fuel-consumption SUVs and has no new energy vehicle production to support it, it became the largest negative-points car company with 270,000 negative fuel consumption points last year. At present, it seems that Great Wall Motors will suffer serious negative impacts from the double-points policy.

Wang Binggang said: "With the gradual implementation of the points policy, some car companies should pay for their previous strategic decisions. At present, Great Wall Motors has no layout in either pure electric or plug-in hybrid models, and will become the main buyer in the future new energy points market."

Not only that, the policy will bring a lot of pressure on multinational companies' joint ventures in China. For example, Jaguar Land Rover currently does not have any electric or plug-in hybrid models for sale in China, which will lead to the Chinese and foreign companies in the joint ventures to domestically produce and import new energy, especially pure electric vehicles, as soon as possible. Therefore, it is particularly critical to be able to adjust and introduce electric models for localization in a timely manner.

Take Jaguar Land Rover as an example. Its sales in China last year were 119,000 vehicles. According to the above policy requirements, its new energy vehicle credits in 2018 need to be 9,524 points. Based on 5.6 points for each pure electric vehicle (based on a range of 400km) and 2 points for each plug-in hybrid vehicle, it must produce 1,700 pure electric vehicles or 4,762 plug-in hybrid vehicles in 2018 to meet the standards.

From the perspective of producing positive points for new energy, there are two paths to take: one is to increase the output of new energy; the other is to increase the range of a single vehicle. However, increasing output and range will result in corresponding increases in investment and costs.

"Considering the current market acceptance, car companies are more cautious about investing in new energy vehicles. For example, the Denza car launched earlier by Daimler and BYD has an investment of 3 billion yuan, but the investment has not yet been recovered." On the 18th, a senior executive of a multinational company said in an interview with a reporter from 21st Century Business Herald.

It is undeniable that increasing the driving range can be an effective way for car companies to earn points. The above-mentioned person said: "It is difficult for the new energy industry to make profits at present. Traditional companies can only invest in the new energy industry on the basis of maintaining existing operations, but there are still many uncertainties in this investment. Large companies can still support this transformation, while small and medium-sized companies will face greater pressure. At the same time, it is not ruled out that car companies may falsely report the driving range or forcibly increase the battery to increase the driving range."

The trading mechanism needs to be implemented as soon as possible

On the 16th, Lu Qun, chairman of Qiantu Motors, said in an interview with 21st Century Business Herald: "The carbon credit policy is definitely to guide the development of new energy, including guiding traditional cars to switch to new energy. But it also has uncertainties, which depends on the strength of the policy. If the company's carbon credits do not meet the requirements or have too many negative credits, will the government's punishment of the company affect the consumer price level? So from this perspective, it is still unclear how much impact the carbon credit policy will have."

In addition, automakers have called for the trading mechanism to be implemented as soon as possible. Referring to the "Zero Emission Vehicle (ZEV) Plan" points system in California, the new energy points trading market is a crucial part of China's "fuel consumption + new energy points" policy. New energy positive points are used as a supplier to meet the requirements of negative fuel consumption points and negative new energy points.

However, the credit system in the United States is more flexible. In the US market, the ZEV credit task target for the year is established based on the sales volume of non-new energy vehicles in the past years. In order to meet the compliance requirements, automobile companies need to sell zero-emission vehicles and clean vehicles to meet the ZEV credit requirements. Companies that fail to meet the standards can purchase credits from companies with surplus credits, make up the credits within two years to meet the compliance requirements, or pay a fine of $5,000 for each credit. Compliant companies can either sell surplus credits for profit or store them for future use.

Therefore, based on the experience of the US market, research by relevant domestic institutions shows that the fine for violations of points in China may be around 5,000 yuan, and the price of new energy points should be slightly lower than the fine amount, around 3,000 to 5,000 yuan.

Given that the current trading mechanism for new energy credits is not yet perfect, the number of new energy vehicles and traditional gasoline vehicles produced by automakers in 2018 will only be counted without penalties, which also gives companies policy transition time to a certain extent. However, it can be seen that companies with new energy vehicle production qualifications may become potential targets for cooperation, alliances, investment, and mergers and acquisitions between state-owned enterprises and multinational corporations.

In this regard, Shen Haiyin, CEO of Singularity Motors, said, "The points policy is good for start-ups. Currently, traditional car companies are seeking cooperation with start-ups. Even if they do not obtain qualifications, traditional car companies can alleviate the pressure brought by the points policy by doing OEM for start-ups. The two can complement each other."

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.