China shifts automotive strategy and embraces hybrids
China Knowledge Online
Jul 15, 2019

Jul 15, 2019 (China Knowledge) - China is set to shift its automotive strategy to rely more on hybrid vehicles instead of depending solely on electric vehicles. The policy suggests that the China will use hybrids as a useful tool to tackle its air pollution problem. The shift is likely to work in favor of Japanese automakers such as Toyota Motor and Honda Motor.

Beijing has been making efforts to tackle its serious air pollution problem by implementing the world's strictest rules for exhaust emissions. Manufacturing and sales quotas were introduced this year to encourage use of new-energy vehicles, including electric cars, hydrogen fuel cell vehicles, and plug-in hybrids.

New-energy vehicles must account for 10% of automakers' fleets in 2019. Hybrid vehicles will be reclassified as low-fuel-consumption passenger vehicles, which will make it easier for automakers to meet environmental quotas.

Toyota and Honda are especially primed to benefit most from these new regulations. The two companies altogether sold over 2 million hybrids worldwide in 2018. Their companies view these new rules as an opportunity to increase sales of their own hybrids and supply technology to other automakers. According to a Toyota executive, China has huge potential for demand of hybrids. In 2018, hybrids accounted for only slightly more than 10% of the nearly 1.49 million vehicles Toyota sold in China.

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