What does the dual credit system for automakers mean?
2 Answers
The dual credit system for automakers refers to Corporate Average Fuel Consumption (CAFC) credits + New Energy Vehicle (NEV) credits. Below are specific explanations about the dual credit system: 1. Definition: The government will manage credit accounting for passenger vehicle manufacturers from two aspects. Negative CAFC credits can be traded, offset, or transferred with NEV credits. If an automaker doesn't produce NEVs or has insufficient production, it needs to purchase NEV credits from other manufacturers to compensate for its negative credits to avoid penalties such as suspension of high-fuel-consumption vehicle production. 2. Background: The implementation of the "Dual Credit Management Measures" demonstrates China's determination to develop NEVs and will significantly boost the domestic electric vehicle industry. The dual credit policy mainly references the EU's carbon emission cap policy and California's zero-emission vehicle policy but imposes stricter regulations. By gradually increasing the NEV credit ratio year by year, it incentivizes traditional automakers to accelerate transformation and upgrading, promoting the rapid development of the NEV market.
The Dual Credit Policy for automakers is essentially two KPIs set by the government for car manufacturers: fuel consumption credits and new energy vehicle (NEV) credits. Simply put, the government requires every vehicle to be fuel-efficient. If a company's average fuel consumption across all its gasoline-powered vehicles meets the standard, it earns positive credits; exceeding the standard results in negative credits. On the other hand, the NEV credits compel automakers to produce more electric or plug-in hybrid vehicles, with credits calculated based on the vehicle's range and type. If a company ends up with a negative total credit balance, it must purchase credits from high-scoring companies like Tesla to compensate, or face penalties such as production suspension of high-fuel-consumption models. This policy is quite stringent, essentially forcing automakers to transition towards new energy vehicles.