China Embraces Hybrid Cars in Pivot From Plug-in Only Path

  • Government wants one fourth of vehicles to be hybrid by 2030
  • Marks first ‘clear target’ to develop hybrids without plugs

The Toyota Levin hybrid.

Photographer: Qilai Shen/Bloomberg

China’s government is pivoting after years of promoting plug-in vehicles, elevating the importance of conventional hybrids and setting its first sales targets for the segment in a move that could benefit Toyota Motor Corp. and suppliers like Hunan Corun New Energy Co.

The government wants one in four vehicles to be plug-less hybrids that run on both gasoline and electricity by 2030, according to a transcript of comments made Wednesday by Ouyang Minggao, who leads a group China’s auto industry regulator commissioned to set targets for energy-saving autos.

Before reaching the 2030 goal, hybrid sales should account for 8 percent of total passenger vehicle sales by 2020 and rise to 20 percent by 2025, according to the Technology Roadmap for Energy Saving and New Energy Vehicles, drafted for the Ministry of Industry and Information Technology.

The targets represent a significant shift after years of China’s government policies excluding conventional hybrids from subsidies offered to reduce tailpipe emissions and dependence on imported oil. The industry regulator has focused on plug-in vehicles and downplayed the importance of hybrids, to the detriment of automakers including Toyota, which argues the technology could be more widely accepted by consumers as a solution.

‘Clear Target’

“This is the first time we set a clear target for developing non plug-in hybrid technology,” said Wang Hewu, an associate professor at the department of automotive engineering of Tsinghua University, who was involved in drafting the road map. “The government has always been emphasizing the importance of developing energy-saving vehicles.”

Hunan Corun shares climbed as much as 4.9 percent, their biggest jump since Aug. 19, and were up 3.6 percent as of 10:03 a.m. in Shanghai trading. Geely Automobile Holdings Ltd. gained as much as 3.8 percent.

China requires automakers to lower the average fuel consumption of their vehicles to 5 liters per 100 kilometers by 2020 from the current 6.9 liters. The government has targeted a 10-fold increase in electric vehicle sales by 2025.

While many local automakers have devoted resources to developing pure electric vehicles and plug-in hybrids, manufacturers such as Zhejiang Geely Holding Group Co. and Hunan Corun have been lobbying the government to step up support for development of gasoline-electric hybrids.

Hunan Corun’s Chairman Zhong Faping has proposed the government should put hybrids on equal footing with plug-in cars for the past 14 years in his role as a member of the National People’s Congress. Hunan Corun supplies batteries for Toyota’s China-built hybrids.

“Government is shifting to include energy-saving vehicles such as non-plug-in hybrid in the auto industry development strategy and setting a clear road map for growth of such vehicles,” said Cui Dongshu, secretary general of Passenger Car Association. “It’s a breakthrough and it will provide guidance for automakers’ development going forward.”

— With assistance by Yan Zhang, and Tian Ying

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