People’s Republic of China (hereafter ‘China’) is the largest light-duty vehicle (LDV) market in the world, with sales of almost 23 million units in 2019. In terms of average fuel consumption of new LDVs, China in 2019 ranked in the top 15 among major LDV markets. Average fuel consumption dropped from 8.7 litres of gasoline equivalent per 100 kilometres (Lge/100 km) in 2005 to 7.2 Lge/100 km in 2019, reflecting an annual average decrease of 1.3%. Fuel economy improvements have occurred across all segments from 2005 through to 2019, though particularly rapid progress took place in the city car segment between 2015 and 2017, with fuel consumption falling on average by 10.6% annually.
China’s LDV market has substantially changed with the sales share of city cars contracting from 22% in 2005 to 4% in 2019, while the market for SUV/pick-ups ballooned from 6% in 2005 to 42% in 2019. As a result, the average weight of LDVs in China increased 23% since 2005 and reached 1 476 kg in 2019, nearly the same as the global average.
Gasoline powertrains continue to dominate the LDV market in China, accounting for 93% in 2019. However, shares of electric, plug-in and hybrid powertrains have continued to grow since 2005. In 2019, electric powertrains accounted for 3.2% of LDV sales, primarily in the city car segment. Hybrids accounted for 2% of LDV sales, while plug-in vehicles made up 1.1% of LDV sales in 2019.
Phase I and II fuel consumption standards were first enforced in 2005 in China, requiring each vehicle model to meet specific fuel consumption thresholds. In 2011, Phase III standards introduced corporate average fuel consumption (CAFC) targets, which established fleet average targets on top of the per-model standards already in place. Phase IV took effect in 2016, setting a new sales fleet average fuel consumption target of 5.0 L/ 100 km for 2020. Currently China has Phase V standards in place, with fleet average targets set at 4.0 L/ 100 km (NEDC) by 2025 and 3.2 L/100 km by 2030.
China’s CAFC scheme is linked to New Energy Vehicle (NEV) credits. In short, manufacturers can generate credits through the production of vehicles based on vehicle efficiency, electric range and vehicle weight to lower the stringency of CAFC targets.
In 2009, labels showing fuel consumption, fuel type, rated power and vehicle weight, among other details, were made mandatory for passenger vehicles. China also offers subsidies on the purchase of plug-in hybrid and battery electric vehicles, which favour greater vehicle efficiency and vehicles with longer driving range and high-density batteries. However, such subsidies will be gradually phased out by 2022.