China has attempted a sharp pivot away from coal in recent years, banning imports at certain ports and suspending mine development in efforts to curtail pollution and potentially restructure its energy system.
Now the country’s vice minister of industry and information technology says China is also considering a ban on internal combustion engines.
The vice minister, Xin Guobin, said research on a ban is already underway, and that a timeline on possible implementation will come later. “Those measures will certainly bring profound changes for our car industry’s development,” he said at an auto industry event in Tianjin, according to a report from the Xinhua News Agency.
The comments are far from an explicit moratorium. But consideration of a ban is yet more evidence of China’s sincere desire to transition away from fossil fuels. A decision to implement a ban would put the country among the ranks of the United Kingdom, France, Norway and the Netherlands, all of which have recently considered phase-outs of fossil fuel cars in coming decades.
China lays claim to the largest traditional auto market in the world, but electric-vehicle sales are already taking off there. State media estimated that automakers will sell over 800,000 electric cars in China in 2017, an increase of about 58 percent over the previous year.
Government subsidies have helped boost popularity. A quota, which requires automakers to sell 12 percent electric or plug-in hybrids by 2020, has also spurred growth. Increased demand in China from a top-down ban would only add momentum to a worldwide explosion in electric vehicles.
As GTM has written in the past, falling battery prices are encouraging researchers to drastically revise projections for electric-vehicle sales. A forecast of electric-vehicle sales from OPEC, a group of oil-producing countries, ballooned 500 percent between 2015 and 2016, to a total of 266 million electric vehicles by 2040.
An analysis from GTM’s parent company, Wood Mackenzie, suggests electric cars could make up 85 percent of new auto sales by 2035.
Such a drastic pivot in a market as large as China’s won’t come without challenges. Automakers are generally less confident about the transition.
Cui Dongshu, head of a Chinese auto industry group, said a possible phase-out of fossil fuel cars would be “a long process” because of slow progress from domestic car manufacturers, as well as customers' unfamiliarity with electric vehicles.
During the announcement, Vice Minister Xin said companies should “vigorously develop new energy vehicles” to meet demand.
Xin said any resistance to change will mean “turbulent times” for car companies in coming years. As a broad report from analyst firm RethinkX put it in May, car companies could be looking at “total disruption” of the traditional auto industry as early as 2021.
A possible ban in China, then, may act as another signal that sweeping change is coming for the auto sector -- as well as indicate how seriously the country is considering a transition to energy consumption.
“This will ask everyone, from energy and technology sectors as well as traditional automakers, to change to the lane to develop new powertrains,” Zhang Yang, a vice president at electric vehicle company Nio, told Bloomberg.