Association head says easier entry will allow for greater production opportunities

China's top industry planner is likely to loosen up requirements on new energy vehicle production to better promote development, which is being thought of as a significant step for the industry.

The Ministry of Industry and Information Technology is collecting opinions till March 10 on its draft amendments published earlier this month to current regulations concerning automakers and automobiles in a bid to facilitate production of new energy cars.

According to the draft, the design and development capacity necessary for new energy vehicle production has changed to technical support capacity, which means new energy vehicle companies are allowed to outsource production of fuel carmakers instead producing them in-house.

Currently, regulations on new energy cars are parallel to those on fuel cars. Enterprises engaged in new energy cars are required to be capable of design, development and production.

Companies must obtain production and sales qualifications from the National Development and Reform Commission and the Ministry of Industry and Information Technology.

Production qualification is an issue that also troubles most emerging vehicle makers.

Only 13 companies have so far met sales qualifications, and 18 have the production qualification.

Therefore, electric vehicle startups, including Nio and Xpeng, are turning to conventional carmakers to become production-compliant.

Cui Dongshu, secretary-general of the China Passenger Car Association, told The Paper that further easing the entry, adopting a more open and inclusive regulatory will leave more choices for the companies.

Other industry analysts said this is a significant opening-up step for China's new energy vehicle industry and will make entrance and cooperation in the segment for conventional and foreign automakers easier. The facilitated entrance options will lead to a reduction in production costs for new energy cars.

Lower production cost is important for development of new energy cars in China after the government cut subsidy rates for purchases of new energy cars sharply in 2019 and is likely to end them in 2021.

The new energy vehicle subsidies introduced a decade ago have played an important role in turning the country into the top the market globally.

The government set a timetable about four years ago to phase out subsidies by the end of this year.

However, Bloomberg reported on Thursday that China may extend subsidies for electric vehicle purchases beyond this year in an effort to revive sales. Policymakers have also discussed the possibility on the back of China's first annual decline in sales of new energy vehicles in 2019.

The falloff in demand came after the government trimmed subsidies for buyers last July to help streamline the industry and make it less reliant on state support.

Though the talks predate the emergence of the coronavirus as a global threat, the outbreak has piled more pressure on the auto industry by causing halts in production and keeping people away from showrooms.

Talks are at a preliminary stage and there is no guarantee the subsidies will be extended, the people said.

As things stand, they are still set to be phased out at the end of 2020.

According to China Association of Automobile Manufacturers, China's new energy vehicle has declined for seven months in a row since July. Sales of new energy vehicles tumbled 54 percent to 48,500 in January from a year earlier.

Those figures were largely before the novel coronavirus outbreak, which has exacerbated the most severe downturn on record in China.

Car sales in China plunged 92 percent during the first two weeks of February as the coronavirus outbreak kept buyers away from showrooms, according to the China Passenger Car Association.

Dealers gradually restarted operations during the second week of February, when daily sales of passenger cars stood at 4,098 units. Those figures still represented a decline of 89 percent from a year earlier, Cui said on Friday.

The industry association estimated that auto sales will rebound in April as pent-up demand unleashes if the epidemic is effectively contained by then.