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Tesla China Could Reap Benefits from Government's EV Quota Update

by Ma. Claribelle Deveza April 01, 2020

Tesla China Could Reap Benefits from Government's EV Quota Update

Tesla China is poised to reap benefits from the government's initiative to ease its EV quotas, which is reportedly being considered by authorities due to the adverse effects of the coronaries outbreak to the country’s auto market. The information was related by people familiar with the matter, as noted in a Reuters report.

According to the publication’s sources, policymakers in China, the world’s biggest auto market, may also be delaying the implementation of new emission particle restrictions by six months. This will be done to give some aid to China’s car industry, which saw a 79% drop in February. Estimates point to a 10% drop in the first half of the year as well.

“Policymakers acknowledged that automakers are strained to promote electric models when overall demand is slowing. They want the auto industry to recover steadily this year,” one of the people familiar with the matter remarked.

This does not mean to say that details of the reported plan have been finalized, however. Authorities are reportedly still reviewing the proposed changes. One of Reuters’ sources even stated that the review is already being discussed with officials at industry and government ministries, as well as automakers and industry bodies.


Xin Guobin, vice industry minister, seemed to have teased the government’s proposed changes, which include eased EV quotas. On Monday, he stated that China would “make adjustments on new energy vehicles and related policies to further promote the coordinated and healthy development of the automotive industry.”

Both the Ministry of Industry and Information technology (MIIT) and the Ministry of Ecology and Environment have yet to issue a comment on the matter.

While the update to the country’s EV quotas will likely benefit carmakers producing vehicles that run on the internal combustion engine, the changes will likely provide Tesla with a lot of opportunity to expand its reach in the country’s EV market.

With legacy automakers likely taking advantage of the new EV quotas to push more profitable ICE cars, Tesla can establish itself as the premier, bang-for-your-buck electric car provider for the local Chinese market. Together with domestic automakers such as BYD, which is already making profitable electric cars, Tesla can help lead the way in pushing EVs mainstream in China.

Tesla is actually well-equipped to handle such a task. Gigafactory Shanghai has returned to full operations and is now producing 3,000 Made-in-China Model 3 per week. China’s Model Y program is also ongoing, and the buildout of Phase 2 of the factory is underway. For now, the headwinds in China seem to be a perfect storm for Tesla. The company just has to be up for the task.

Featured Image Credit: Tesla

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