Last week, Chinese Premier Li Keqiang met privately with German chancellor Angela Merkel to discuss China’s proposal to require all manufacturers to sell more so-called new energy vehicles. After the meeting, Merkel thought she had an agreement that would allow German companies that manufacture cars in China a little breathing room before complying with the new rules.

The skies over Beijing China

Smog in Beijing cleared up after cars were banned from the city for 20 days.

But a notification posted online this week by the Legislative Affairs Office, which reports to the Chinese cabinet, says otherwise. It indicates that all manufacturers will be required to generate EV credits that equal 8% of sales in 2018, 10% by 2019, and 12% by 2020. The rule applies to both foreign and domestic car makers.

The credits are computed based on the level of electrification of the cars produced. Fully electric cars earn more credits than plug-in hybrid cars, for example. Plug-in cars that go further on battery power alone are rewarded with more credits than cars that have more limited electric range.

The latest draft by China’s Ministry of Industry and Information Technology is essentially the same as the proposal first promulgated last September. “That’s what it looks like: no compromise, no concession,” says┬áDominik Declercq, China representative for the European Automobile Manufacturers Association.

Michael Clauss, Germany’s ambassador to China said: “It seems that the political leadership has understood that this is a problem but there seems to be a disconnect between them and the working level at MIIT.”

China is beset by massive smog issues in many of its major cities. Beijing gets most of the attention, but the country has more than 100 cities with more than one million inhabitants. The United States has 10. China’s growing middle class is buying more and more automobiles, which exacerbates air pollution problems.┬áMaking more of those cars operate on electricity is a top priority of the Chinese government.

But Merkel and other global leaders worry the restrictions will give local manufacturers an important advantage in the marketplace. She wanted German companies to get some relief from the rules with a promise that they would catch up later. That’s not going to happen, apparently.

Source: US News & World Report