China Delays 8-Percent Electric Car Quota to 2019

Originally scheduled for 2018, sources say German pressure put the environmental initiative in the world's largest auto market on hold.

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An auto industry source told Reuters that China has agreed to delay an 8 percent quota for environmentally friendly vehicles by one year, pushing it to 2019. The proposed quota would require 8 percent of all automakers’ new car sales in China be either fully electric or plug-in hybrid which was met with contention from automakers worldwide.

Chinese Premier Li Keqiang said a “solution” was met for implementing the proposed quotas after a meeting with German Chancellor Angela Merkel on Thursday in Berlin. He did not provide further details of what that solution entailed.

According to the industry source, Germany and China made a compromise that will allow German automakers to forego penalties if they ramp up electric and plug-in hybrid sales later than what the original quota called for. How penalties will be enforced if that ramp-up doesn’t happen is unknown.

When asked about the new agreement, Daimler CEO Dieter Zetsche said, “What we talked about was the timeline, the pace of this transition. I think we reached a result which is satisfactory for everybody.” That sounds an awful lot like a delay that benefits Germany.

Germany has a lot to gain with this potential delay. The presence of the German auto industry has been growing rapidly in China over the past few years. Maintaining that presence by automakers like Volkswagen, BMW, and Daimler has economic importance for Germany.

German news source Handelsblatt has also reported that China agreed to a year delay in the 8 percent quota. This news comes just one day after President Donald Trump announced that the US will withdraw from the Paris Climate Accord which some news sources are saying makes the EU and China the global leaders on combating climate change (as long as it means Germany can still sell a lot of cars in China).