EU Discarding Its Combustion Engine Car Ban Can Benefit Chinese Automakers, Insiders Say

(Yicai) Dec. 18 -- The fact that the European Union plans to backtrack on its plan to halt sales of new gasoline and diesel autos by 2035 could benefit Chinese carmakers, according to industry insiders.Chinese pure electric vehicle manufacturers may hold an advantageous position in the new point-based system the EU plans to implement to replace the combustion engine car ban because they can generate additional income by selling excess credits, insiders explained. In contrast, European automakers may need to purchase credits to compensate for shortfalls in meeting emission standards.On Dec. 16, the European Commission proposed to lift the sales ban on new gasoline and diesel cars from 2035 and replace it with a new regulation requiring automakers to reduce carbon dioxide emissions from new vehicles by 90 percent compared with 2021 standards.Moreover, the regulation introduces a point-based reward mechanism. For each M1E class small EV that a manufacturer sells after completing the assembly of the vehicle and battery pack within the EU, it will receive 1.3 times the basic carbon emission points. These points can be directly used to offset the emission accounting for high-emission vehicle models.The proposal, which still needs to be submitted for review to the European Parliament and the governments of member states, received strong support from German and Italian automakers. They believe that EVs in Europe face challenges, such as high prices and insufficient charging infrastructure, which makes the previous target unlikely to be reached.Other carmakers, such as Volvo Cars and its EV brand Polestar, have publicly defended the ban on combustion engine vehicles because they have invested much in the electrification and believe this could lead to the EU lagging behind others in the transition.Over 1.47 million EVs were registered in the EU in the first 10 months of this year, seizing a market share of 16.4 percent, compared with 13.2 percent a year earlier, according to data from the European Automobile Manufacturers’ Association.Sales of Chinese EVs in Europe are steadily increasing. Yicai learned from BYD that the Chinese new energy vehicle giant’s sales in Spain and Germany surged 452 percent and 648 percent to 22,400 units and 19,200 units, respectively, in the first 11 months of this year from a year earlier. In Italy, its sales skyrocketed 4,800 percent to 20,200 units in the period, achieving a market share of 2.8 percent.BYD plans to continue accelerating its expansion in the European market and is expected to have 1,000 stores across 32 countries in Europe by the end of this year.SAIC Motor sold 173,900 units in the EU in the first 10 months of the year, up nearly 40 percent from the same period last year. Other Chinese carmakers, such as Changan Automobile, GAC Group, Nio, and Xpeng Motors, have also entered the European market.Editor: Futura Costaglione