Strategic Analysis: China’s Dual Credit Policy

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Variation between 2021 double credit results for individual OEMs

China’s dual credit policy has been in place for several years and has been a key driver for the rapid growth of the New Energy Vehicle (NEV) segment in China. The latest Strategy Analytics Powertrain, Body, Safety & Chassis (PBCS) and Electric Vehicles Service (EVS) report, China’s Dual Credit Policy – Winners and Losers in 2021 analyzes 2021 dual credit results at the domestic and OEM (Original Equipment Manufacturer) level ), finding that only 54 OEMs achieved dual credit compliance. On average, Chinese OEMs performed much better than their international competitors, such as VW, GM (General Motors), Nissan, Honda and Toyota. OEMs like Tesla and BYD, focused on BEVs (battery electric vehicles), posted the best results.

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2021 Dual Credit Result by OEM (Graph: Business Wire)

The dual credit policy considers both Company Average Fuel Consumption (CAFC) and NEV (New Energy Vehicle) credits and requires all OEMs in China to achieve positive results for both. A failure to offset deficits after adopting all compliance approaches, including buying credits from the market, leads China’s Ministry of Industry and Information Technology (MIIT) to deny approval of the production of new models. Strategy Analytics’ analysis of MIIT’s dual credit results showed a national surplus of 10.3 million CAFC credits and 6 million NEV credits in 2021. 54 OEMs achieved dual credit compliance and targets become more and more strict.

“Despite tougher fuel consumption targets and weakened credit benefits for NEVs, the positive 2021 result was mainly contributed by an astonishingly high NEV penetration of 15%,” noted Julia An, report author and analyst. from the sector to the PBCS and the EVS service. “The further reduction in the NEV model score and increase in the target NEV quota, as proposed by the recently released draft policy for 2024 and 2025, shows the consistency of this regulation and comes as no surprise to OEMs.”

“On average, Chinese OEMs delivered a much better result than their international competitors, such as VW, GM, Nissan, Honda and Toyota,” said Asif Anwar, director of PBCS and EVS. “International players must accelerate the implementation of their electrification strategies in China to meet the stricter dual credit compliance requirements.”

Source: Strategy Analytics, Inc.


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Powertrain, Body, Safety and Chassis Service (PBCS)

Electric Vehicle Service (EVS)

Report Contacts:

European contact: Asif Anwar, +44 (0)1908 423 635, [email protected]

US contact: Mark Fitzgerald, +1 617 614 0773, [email protected]

Contact China: Kevin Li, +86 186 0110 3697, [email protected]

Source: Strategy Analysis

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