How to deal with Chinese car companies under the double-point evaluation

In September 2017, the Ministry of Industry and Information Technology and other departments officially issued the "Parallel Management Measures for the Average Fuel Consumption of Passenger Vehicle Enterprises and New Energy Vehicles Points" (hereinafter referred to as double-point assessment), which stipulated two sets of points for CAFC (Corporate Average Fuel Consumption) and NEV (New Energy Vehicle). The implementation of the policy has imposed fuel consumption requirements and new energy vehicle production ratio requirements for domestic passenger vehicle enterprises, and adopted punitive measures for enterprises that failed to meet the CAFC and NEV negative points. Therefore, having a clear understanding of the policy has an important guiding role for automobile companies to formulate development strategies.

China's double-point assessment

1. The background of the double-point evaluation

In order to solve the problem of China's energy supply shortage and the achievement of national energy conservation and emission reduction targets, the Ministry of Industry and Information Technology issued the “Standards and Indicators for Evaluation of Passenger Vehicle Fuel Consumption” and the “Standards for Passenger Vehicle Fuel Consumption Limits” in 2014. The target value of fuel consumption of various models in Phase IV of China and the target value of national average fuel consumption are proposed. Since 2016, China began to implement the first fuel consumption standard Ⅳ stage, but the rewards and punishments measures have not been specified, without effective constraint to car companies. At the same time, various auto companies have long relied on policy subsidies to reduce the price of new energy vehicle products for sales, which has caused pressure on the national fiscal revenue and expenditure, and has given rise to the problem of fraudulent subsidies. Since 2016, the state's financial subsidy for new energy vehicles has been reduced year by year, and the subsidy for new energy vehicles will be completely eliminated in 2020, when new energy vehicle enterprises will face great pressure.

In this context, in order to establish a long-term mechanism for the development of energy-saving and new energy vehicles, and at the same time weaken the negative impact of the financial subsidies [2], in September 2016, the Ministry of Industry and Information Technology issued a draft of the double-point assessment. In June 2017, a more rigorous consultation draft was issued. In September 2017, the double-point evaluation method was officially released, which will take effect on April 1, 2018. The management method proposed a CACC and NEV two-point parallel management system for passenger car enterprises, clearly stated the accumulation and exchange rules of the two types of points, and stipulated the punishment measures for the unqualified car companies, and formulated new energy multiplications. The technical requirements for vehicle integration emphasize the two technical indicators of driving range and power consumption. Therefore, each car company must have a full understanding of double points in order to prevent punishment and avoid affecting the survival and development of the company.

2, double points assessment method

The double-point evaluation puts forward a series of hard assessment indicators for car companies. By establishing a corporate credit system and specific punishment rules, enterprises are required to comply with the regulations, releasing the signals for the development of new energy vehicles, especially pure electric vehicles, through new energy point transactions. Policy subsidies have been converted into financial compensation between car companies. In this regard, car companies need to consider their new energy vehicle product strategy, relying on the purchase of new energy points from the point market that the New Deal is about to produce to meet the requirements, or through the independent production of new energy vehicles to achieve standards or reduce their own fuel vehicle production, which Become a problem that car companies must make choices.

The countermeasures of American car companies under the California Zero Emission Vehicles Act

1. California Zero Emissions Vehicle Act

In the 1990s, California issued the California Zero Emission Vehicle (ZEV) Act. The bill shows that companies that sell more than 4,500 cars in California must meet certain zero-emission vehicle credit line credit requirements.

Each vehicle calculates the bicycle integral value according to its cruising range. Finally, the bicycle integral value of all zero-emission vehicles sold in the company in one year is the ZEV integral value of the enterprise [7]. Companies need to produce a zero-emission vehicle that meets the requirements to generate ZEV points. The United States stipulates that models that can generate ZEV points after 2018 include pure electric vehicles, fuel cell vehicles, and plug-in hybrid vehicles.

If the ZEV score accumulated by the company cannot meet the target, it can also be obtained by purchasing points from other companies, otherwise the fine must be paid to the California government in accordance with the Health and Safety Law.

2. American car enterprise new energy vehicle strategy

2.1 General Motors' new energy product strategy

Under the dual pressures of the United States' increasingly stringent fuel consumption standards and the California Zero Emissions Act, GM insists on the development of small-displacement turbocharged common-rail diesel engines, cylinder deactivation technology, etc. to improve fuel economy and significantly reduce emissions; The profit from the use of traditional energy vehicles gradually promoted the investment in new energy vehicles, from the purchase of ZEV points to the production of the first Volt to generate ZEV points, and then the Bolt with a cruising range of 380km in 2017, the level of automatic driving technology has been able to The period pulls Model3 to compete. It has formed a technological development route that "production cars are mainly developed with extended programs and pure electric, luxury cars are plug-in-based", and has become the seller of the US ZEV points market.

2.2 Tesla's new energy product strategy

In 2012, Tesla benefited from the sale of ZEV points, averaging $13,900 per vehicle; in 2013 Tesla sold 650.2 emission points, earning $250 million from it, equivalent to 12 of its annual revenue. %. With the development funds obtained from the ZEV points market, the transition from high-end to low-end products was successfully achieved.

Since the traditional energy vehicles are not produced, the ZEV points generated by each Tesla vehicle can be realized in the point trading market, thereby reducing the bicycle price and improving the market competitiveness of the products.

Analysis of China's car enterprise integration

1. The status quo of China's car enterprises

In 2016, 124 passenger car companies in China produced or imported passenger cars totaling 24,494,700, including 334,877 new energy passenger cars, CAFC positive points of 1,174,860,000 points, negative points of 1,429,900 points, and NEV positive points of 989,500 points. There are 44 CAFC non-standard enterprises, accounting for 35.5% of all passenger vehicle enterprises.

2. Analysis of the impact of the proportion of points on the car enterprises

In the first half of 2017, the production of traditional passenger vehicles was 11.27 million, and the production of new energy passenger vehicles was 212,000. According to the 10% ratio of new energy scores in 2019, the new energy points actually need 902,000 units, which mean that the 10% NEV points ratio implemented in 2019 may result in a serious shortage of NEV points. Since the current point price has no guidance and reference, the uncertainty of the point transaction is increased, which may lead to an inadvertent increase in the price of the point.

Under this circumstance, car companies should invest more in the new energy product strategy, and develop new energy vehicles with long driving mileage to obtain higher NEV points, instead of mass production of new energy with relatively low driving range and short driving range. Automobiles, through the amount of discounts to achieve CAFC compliance, this will not be conducive to the advancement of new energy vehicle technology.

In this regard, the assessment method adjusts the number of NEV points applicable to the car companies and the set year. If it reaches 30,000 or more, the new energy vehicle integral ratio requirement will be set from 2019. For the current car companies with small or even zero NEV points, a two-year buffer period is provided.

It can be seen that the adjusted "double point assessment" method is in line with the current status of domestic car companies, which improves the achievability of the points policy, helps maintain the balance of the point trading market, and promotes the improvement of the price of new energy vehicles by the car enterprises through technological advancement. Enhancing consumer recognition of new energy vehicles will help drive policy-driven to market-driven.

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