The Chinese Government has mandated that at least 30% of annual purchases of public sector vehicles should be new energy vehicles (NEVs), provided they meet the operating requirements of the various government departments.
The circular was released by the Ministry of Finance earlier this week and followed a similar notice issued by a central government procurement agency in October. Government departments have been instructed to prioritise NEVs in their purchases for official vehicle fleets, as the government looks to drive up overall sales at the expense of internal combustion engine (ICE) vehicles.
In its notice, the Ministry of Finance said: “Procurement entities should enhance the management of government procurement demand for official vehicles, fully understand the functions and performance of NEVs, and take the lead in using NEVs based on actual need.” The notice also stated that for public sector vehicles used on stable routes, particularly in urban areas, NEV procurement should, in principle, be raised to 100%.
NEVs comprise mainly battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs), but it is clear that the Ministry is looking to lift BEV sales in particular as PHEV sales are already outperforming strongly. Last July the government doubled the one-off subsidy to CNY20,000 (US$2,800) for buyers trading in their old internal combustion engine (ICE) vehicles for qualifying new BEVs.
Overall sales of Chinese-made NEVs surged by 36% to 11.262 million units in the first eleven months of 2024, according to data compiled by the China Association of Automobile Manufacturers (CAAM), while overall vehicle sales rose by just 4% to 27.940 million units. Most of this growth has come from PHEVs, which surged by 85% to 4.519 million units, while BEV sales were up by just 15% to 6.738 million units – despite significant sales incentives offered by the government and discounting by the automakers.
Meanwhile, sales of Chinese-made ICE vehicles dropped by over 10% to 16.678 million units in this period.
