Nature Positive Role of the Automotive Sector China Deep dive

1.2 Sustainability-powered transition of China’s automotive sector The EV industry has powered the rapid development of China’s automotive sector in the past few decades. The amount of domestic unit EV sales in 2022 was 17 times that of the amount of sales in 2016. Now, the domestic market is stabilizing. With EV unit sales from 2024 to 2029 potentially moderated to 2% growth,28 “going global” has become a key focus for China’s automotive industry. Policy-driven green transition To promote a green transition and the sustainable development of the automotive industry, the Chinese government has launched and continuously adjusted numerous industrial development policies. The focus of the EV sector in China has shifted from policy-driven to market-driven growth. Key policies include industry development planning and guidance, emissions standards, the phase-out of high-emission vehicles and improvement of energy replenishment infrastructure. Promote EV industry Since 2012, when the State Council released a document designating new energy vehicles (NEVs) as the main focus for automotive industry development, numerous documents have been released to clarify industry development plans, promote industrial application and improve the ecosystem: –The State Council 2012 Energy-Saving and New Energy Vehicle Industry Development Plan (2012- 2020) initially designated NEVs as the main focus for the development of the automotive industry in China. –The General Office of the State Council 2014 Guiding Opinions on Accelerating the Promotion and Application of New Energy Vehicles aimed to accelerate the adoption of NEVs and promote the transformation of the automotive industry. –The General Office of the State Council 2020 New Energy Vehicle Industry Development Plan (2021-2035) established a market-driven industry development orientation and encouraged technological and business model innovation. To promote NEV industries development, China began offering purchase subsidies in 2009.29 Over time, subsidy thresholds have risen multiple times, while financial subsidies for EVs officially ended in 2022. Meanwhile, the purchase tax reduction was phased out in accordance with a planned schedule.30 With these supporting policies being phased out, the EV industry needs to explore other engines for continued growth. Phase out high-emission vehicles To limit air pollutants and greenhouse gas (GHG) emissions, China released the Stage 6 Limits and Measurement Methods for Emissions from light-duty The amount of domestic unit EV sales in 2022 was 17 times that of the amount of sales in 2016. 15 Nature Positive: Role of the Automotive Sector – China Deep-dive