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As EV quotas loom, automakers poised to buy carbon credits

来源:本站  点击:1516  时间:2017-07-26
SHANGHAI -- Beijing is determined to impose quotas on electric vehicle output for automakers via a carbon credit trading program next year -- whether or not the industry is ready for it. 
What will automakers do if they cannot ramp up production of EVs as quickly as required? Well, they can buy carbon credits from Chinese EV makers.
And that seems to be the strategy that many automakers -- both foreign and Chinese -- are likely to adopt.
Great Wall Motor Co., China’s No. 1 seller of SUVs, signed a tentative deal last week with Yogomo Motors Co., an EV manufacturer in Hebei province, where Great Wall is headquartered. 
Great Wall will acquire a 25 stake in Yogomo with a cash investment that will be finalized after an audit of Yogomo’s assets. 
What makes Yogomo so attractive? It is the company’s carbon credits; the deal will let Great Wall buy those credits on preferential terms.
Yogomo, established in 2008, started as a manufacturer of cheap, low-speed electric cars.
Since 2014, the company has expanded its product mix to include microsedans and crossovers with top speeds exceeding 100 kilometers per hour (62 mph). With Great Wall’s investment, Yogomo aims to increase annual sales to 150,000 by 2020. 
Great Wall is not the only automaker that intends to buy carbon credits from EV makers. 
Stephan W?llenstein, chief of the Volkswagen brand in China, told the media in June that he would not rule out buying carbon credits from VW’s Chinese partner, Jianghuai Automobile Co.
JAC makes light vehicles as well as trucks, and it also is a major EV manufacturer in China. In the first six months of the year, the state-owned Chinese company produced 10,200 electric sedans.
Volkswagen Group broke ground last month on an EV joint venture with JAC in the east China city of Hefei, where it is based. The joint venture will start production in late 2018 and will market EVs under its own brand.
The German auto giant plans to introduce 13 EV and plug-in hybrids in China under the VW brand by 2020, plus 10 additional models from 2020 through 2025. 
In May, Great Wall’s first EV, a compact sedan, hit the market. 
So, why do Great Wall and Volkswagen need to buy carbon credits from their joint-venture partners? The main reason is that they will have difficulty meeting their EV quotas on such a tight schedule.
China’s carbon trading program requires automakers to earn eight carbon credits for every 100 vehicles they produce annually in 2018.  The required carbon credits for the same vehicle output will rise to 10 in 2019 and 12 in 2020.
EVs produced in China today typically have a range of 150 kilometers (93 miles), which can generate 2.6 carbon credits per vehicle (the longer the range, the more carbon credits a battery EV can earn).
Last year, VW group’s China output approached 4 million vehicles while Great Wall’s production topped 1.07 million vehicles. 
Assuming their annual output will remain unchanged, to comply with the regulatory requirements, VW must produce 120,300 battery-electric EVs in 2018, while Great Wall must churn out 33,000.
Neither company is prepared to build so many EVs on such short notice.
So a practical alternative would be to buy carbon credits at a good price from the companies in which they invest. 
Beijing proposed the carbon credit plan last September. Since then, VW and several international trade organizations have urged China to delay implementation and relax the quotas. 
But the government is sticking to its original plan. In June, it released an updated version of the regulations that left the quotas and schedule intact. 
To date, few global automakers have started building EVs in China. 
As 2018 draws near, global automakers and some of their Chinese peers will have no choice but to buy carbon credits from local EV producers.

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