China’s New Energy Vehicle Industrial Development Plan for 2021 to 2035

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POLICY UPDATE

JUNE 2021

China’s New Energy Vehicle

Industrial Development Plan for

2021 to 2035

OVERVIEW

In October 2020, the State Council of the People’s Republic of China released the

New Energy Vehicle Industrial Development Plan for 2021 to 2035 (hereafter “Plan

2021–2035”). This is a sequel to the Energy-Saving and New Energy Vehicle Industry

Plan for 2012 to 2020 (“Plan 2012–2020”), released in 2012.

By setting a target of

about a 20% share for new energy vehicles (NEVs)

in new vehicle sales by 2025 and

other development targets for the NEV industry, Plan 2021–2035 aims to build a green,

robust, and internationally competitive auto industry in China. This policy update oers

an overview of Plan 2021–2035 and compares it with its ancestral version.

BACKGROUND

By the end of 2020, China had put 4.92 million NEVs on the road, and these

accounted for more than 50% of the global total.

That number is very close to the

NEV sales target set in Plan 2012–2020. Now China is due for an updated, longer-term

plan that connects the pressing national challenges related to oil conservation, air

pollution reduction, and climate change mitigation with the nation’s ambition to build

a world-class auto industry. At the same time, a new wave of technology revolution is

underway in the global automotive industry. In the future, mobility will not only serve

as a tool to transport people from one location to another, but will also encompass a

wide range of functionalities, such as onboard digital entertainment, energy storage,

and external information communication. It is expected that future demand for

vehicles will trend toward autonomous, connected, electriﬁed, and shared mobility,

and meeting this demand will require innovations across industries. Plan 2021–2035 is

1 State Council, “Notice on printing and issuing the development plan for the new energy vehicle industry

(2021–2035)” [国务院办公厅关于印发新能源汽车产业发展规划（2021–2035年）的通知 ] (2020), http://www.gov.cn/

zhengce/content/2020-11/02/content_5556716.htm

2 In the Chinese context, new energy vehicles (NEVs) are battery electric vehicles (BEVs), plug-in hybrid

electric vehicles (PHEVs; extended-range electric vehicles included), and fuel cell electric vehicles (FCVs).

3 “By 2020, China had 372 million motor vehicles” [2020年全国机动车保有量达3.72亿辆], Sina News, January 7,

2021, https://ﬁnance.sina.com.cn/tech/2021-01-07/doc-iiznctkf0700301.shtml; and Xiaoyu Chang, “China’s

new energy vehicle industry leads the world in scale, with production and sales ranking ﬁrst in the world

for ﬁve consecutive year” [我国新能源汽车产业规模全球领先产销量连续五年位居世界首位], Xinhua News, July 24,

2020, http://www.xinhuanet.com/fortune/2020-07/24/c_1126279474.htm

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2 ICCT POLICY UPDATE | CHINA’S NEW ENERGY VEHICLE INDUSTRIAL DEVELOPMENT PLAN FOR 2021 TO 2035

formed in this context and aims at positioning the Chinese auto industry at the front

of this new wave.

KEY ELEMENTS

VISION

Plan 2021–2035 includes three overarching goals.

» Form a globally competitive auto industry with advanced NEV technologies and

good brand reputation

» Transition to an energy-ecient and low-carbon society with a convenient charging

service network and pure electric vehicles (BEVs) as the mainstream in sales

» Improve national energy security and air quality, mitigate climate change, and

stimulate economic growth in the automobile, energy, transportation, and

information and communications industries

TARGETS

Plan 2021–2035 sets speciﬁc targets for NEV market development, technology

advancement, and the build up of supporting services in the near, mid, and longer

terms, as summarized in Table 1.

Table 1. Targets in Plan 2021–2035

Starting in

2021,

near term

By 2025,

mid term

By 2035,

longer term

NEV market

≥ 80% NEVs in new or renewal public ﬂeets (e.g., buses,

taxis, and delivery vehicles) in pilot zones and key air

pollution regions

100% electriﬁcation of the stock of public

ﬂeets

— ~20% NEV annual sales

BEVs become the mainstream of new vehicle

sales

Key technology

breakthrough

—

Average electricity consumption of new

passenger BEVs = 12.0 kilowatt hours

(kWh)/100 kilometers (km)

NEV core technologies reach world-class

levels

Autonomous driving —

Commercialize autonomous driving in

speciﬁc areas and scenarios

Scale-up the application of highly

autonomous intelligent and connected

vehicles

FCV — — Commercialize FCVs

Charging and

refueling

—

Signiﬁcantly improve charging and battery

swapping services

Build the foundation for a hydrogen fuel

supply system

Build ecient and convenient charging and

battery swapping networks

TASKS

To fulﬁll its vision and meet the targets, Plan 2021–2035 sets ﬁve strategic tasks

for China’s NEV industry for the next 15 years: (1) improve capacity for technology

innovation; (2) build an NEV industry ecosystem; (3) advance industrial integration

and development; (4) build a sound infrastructure system; and (5) increase openness

and deepen international cooperation.

Task 1. Improve capacity for technology innovation

Task 1 focuses on an innovation-driven development strategy for China’s NEV

industry. It requires reinforcing technology innovations in the “Three-by-Three

3 ICCT POLICY UPDATE | CHINA’S NEW ENERGY VEHICLE INDUSTRIAL DEVELOPMENT PLAN FOR 2021 TO 2035

Research and Development”

core areas with a greater focus on vehicle assembly

and integration technologies and the supply system of key components. Task 1 also

highlights cooperation among corporate champions, key national laboratories, and

manufacturing innovation centers to enhance research and development (R&D) of

key technologies, particularly those that are dicult and have the same or similar

technological features as those needed by many ﬁrms in the NEV industry. It also

advocates that institutes such as innovation incubation centers and industrial

associations establish collaborative platforms that support technology transfer, talent

cultivation, ﬁnancing, international communication, and testing. Three technological

innovation projects need particular action: (1) Battery technology, focused on

research into electrode materials, electrolyte technology, lightweighting, safety, cost,

and battery life; (2) Intelligent and connected technology, focused on environment

sensing, smart decision and control, high precision mapping and positioning, vehicle

to everything (V2X) communication, and wire control systems; (3) Foundational

technologies in the supply chain of key components, such as automotive-grade chips,

vehicle operating systems, driving motors, and powertrain control systems.

Task 2. Build an NEV industry ecosystem

In the past, China’s NEV industry was narrowly focused on the production of key

components, vehicle production, and automobile marketing. Task 2 proposes

employing a systematic approach to build and enhance an industrial ecosystem

that includes all NEV-related ﬁrms involved in the production, marketing, and

use of NEVs from upstream to downstream. The intended new ecosystem would

feature synergies in the automotive, energy, transportation, and information and

communication industries, and more. Two core areas of the ecosystem are to be

strengthened: (1) the R&D of vehicle operating systems; and (2) the value chains of

batteries. Task 2 also advocates applying a higher level of intelligent technologies

in NEV design, production, and other post-sales services while ensuring technology

reliability and product quality. In particular, it is encouraged to form coalitions among

vehicle integration, components production, internet, and the electronic information

and communication industries, to cooperate to improve the safety, reliability, and

convenience of vehicle operating systems. In addition, task 2 requires establishing

an ecient battery recycling system by implementing the extended producer

responsibility policy, building up a battery traceability management platform, and

improving technologies and industry deployment for the reuse, recycle, and disposal

of spent batteries from NEVs.

Task 3. Advance industrial integration and development

To boost the formation of the aforementioned industrial ecosystem, task 3 provides

detailed guidance on how to integrate the NEV industry with three vital ﬁelds:

energy, transportation, and the information and communication industries. Regarding

integration with the energy industry, it encourages utilizing more electricity

generated from renewable energy for NEV charging. At local levels, it is encouraged

to launch vehicle-to-grid pilot programs that allow interaction between NEVs and

the grid for the purposes of regulating peak loads and reducing charging costs.

With respect to integration with the transportation industry, task 3 proposes the

establishment of an intelligent trac control system to provide more accessible travel

services, and this involves cooperation between NEV manufacturers and mobility

service businesses. It also urges the application of more NEVs in public ﬂeets,

such as city buses, taxis, time-sharing leasing, non-road sectors, and in logistics

services, especially for inner-city ports. Concerning integration with the information

4 The “Three-by-Three Research and Development” concept includes the three new energy vehicle

technologies as pillars—BEVs, PHEVs, with extended-range electric vehicles included, and FCVs—and three

component technologies, batteries and management systems, driving motors and power electronics, and

intelligent and connected vehicle technologies.

4 ICCT POLICY UPDATE | CHINA’S NEW ENERGY VEHICLE INDUSTRIAL DEVELOPMENT PLAN FOR 2021 TO 2035

and communications industries, task 3 guides the establishment of platforms

for multi-level data collecting, computing, and processing based on the data of

drivers, pedestrians, vehicles, roads, and cloud information to oer better mobility,

trac control, and urban management services. Meanwhile, the use of information

and communication technologies is urged to assist the establishment of a secure

network and to protect data in vehicles, the data that is transmitted, and the data

in the cloud. To be sure, the integration of the industries mentioned will demand

new and comprehensive standards. Task 3 takes this need into account and requires

establishing the corresponding standard system to facilitate data sharing across

sectors and improve the relevant hardware and software compatibility. Particularly,

task 3 emphasizes actions to launch NEV pilot programs incorporated with elements

of smart city building.

Task 4. Build a sound infrastructure system

Task 4 guides the improvement of NEV infrastructure in three aspects: scale-up

charging and battery swapping networks; update urban road facilities with intelligent

ones; and build hydrogen fuel reﬁll supporting systems. In particular, task 4 promotes

the construction of well-deployed, scenario-based, intelligent, and safe charging

networks in both urban and rural areas. It also advocates digitizing transportation

infrastructure such as trac lights, street signs, and test equipment, the application

of satellite positioning, and establishing the relevant supporting standards. As for

hydrogen fuel reﬁll supporting systems, task 4 encourages deploying facilities based

on existing infrastructure used for gasoline, natural gas, or electricity and lowering

the cost of hydrogen production, storage, and transport premised on secured safety.

This task requires particular actions, too. Speciﬁcally, it urges the establishment

of smart and comprehensive infrastructure service platforms with greater facility

compatibility and application of information and communication technologies.

Task 5. Increase openness and deepen international cooperation

Plan 2021–2035 identiﬁes increased openness and the deepening of international

cooperation as vital strategies for building China’s NEV industry into a green,

robust, and internationally competitive one. Thus, it encourages the expansion of

China’s corporate cooperation with foreign ﬁrms, research institutes, and industry

associations in relevant areas such as research, design, investment, talent cultivation,

and more. Domestic ﬁrms are encouraged to make international development

strategic plans, exploit overseas markets, and establish warehouses and post-

sale service platforms abroad. It is also emphasized that supporting services for

international cooperation such as corporate compliance and legal consulting and test

and certiﬁcation services are to be strengthened. Additionally, task 5 guides China to

proactively participate in making the relevant international rules and standards.

COMPARISON WITH THE PREVIOUS PLAN

This section compares the key elements in Plan 2021–2035 and Plan 2012–2020 in

eight dimensions, and concludes with a summary table that illustrates the major

dierences (see Table 2).

SCOPE

Plan 2012–2020 covered energy-ecient internal combustion engine (ICE) vehicles

and NEVs, whereas Plan 2021–2035 is solely about NEVs. This signiﬁes the increasing

importance of NEV development.

5 ICCT POLICY UPDATE | CHINA’S NEW ENERGY VEHICLE INDUSTRIAL DEVELOPMENT PLAN FOR 2021 TO 2035

NEV MARKET GOALS

Plan 2012–2020 focused on expanding the NEV market, as reﬂected by the targets

set for the production and sale of BEVs and PHEVs. Plan 2021–2035 lifts the market

goals by setting sales penetration targets for the entire NEV ﬂeet and particular

targets for public ﬂeets.

KEY TECHNOLOGY BREAKTHROUGH TARGETS

Plan 2012–2020 mainly targeted battery and electric drive system technology

breakthroughs in terms of performance and cost. Plan 2021–2035, meanwhile, targets

all the NEV core technologies, and one particular indicator of the overall vehicle

performance: the average electricity consumption.

INDUSTRY DEVELOPMENT FOCUS

Under the guidance of Plan 2012–2020, China boosted the NEV industry supply

chain, such as key components, batteries, and vehicle production, while encouraging

derivative business forms such as charging services, vehicle-to-grid (V2G), credit

ﬁnancing, insurance, leasing, second-hand transactions, and post-sales services.

However, Plan 2021–2035 promotes all industries involved in the integration of

the NEV industry within the ﬁelds of energy, transportation, and information and

communications, as long as they serve the production, marketing, or use of NEVs.

Additionally, Plan 2021–2035 has a clear industry development focus on the whole

value chain of vehicle operating systems and batteries.

CHARGING INFRASTRUCTURE

Plan 2012–2020 oered preliminary guidance to explore foundational charging

infrastructure technologies and the business models that could best meet the basic

market needs. For example, it encouraged R&D into core technologies such as

charging and billing, facility networking, and monitoring. It also encouraged the use

of pilot programs to determine a future technology roadmap, industrial development

path, and business models through lessons learned.

Plan 2021–2035 oers more precise directions for technology development and

short- and longer-term planning for charging infrastructure. It identiﬁes new focuses

of R&D for charging, such as high-voltage charging, wireless charging, safety

monitoring, and warning systems for charging infrastructure, and seeks to overcome

bottlenecks and boost novel technologies, as well. For longer-term infrastructure

construction, the plan requires incorporating charging and battery swapping

infrastructure deployment into urban and rural planning, grid planning, residential

property management, and urban parking management. For short-term infrastructure

construction, Plan 2021–2035 promotes location-oriented facilities; this means smart,

slow-charging in residential areas that is supplemented by fast-charging in case

of emergencies, and fast-charging along highways in urban and rural areas that is

supplemented by slow-charging. Moreover, Plan 2021–2035 guides the formation

of compatible charging service platforms across charging suppliers, to allow for

information sharing and a uniform method of payment.

BATTERY SWAPPING AND HYDROGEN REFUELING FACILITIES

In Plan 2012–2020, battery swapping and hydrogen refueling were novel technologies

and exploration of them via pilot projects was encouraged. But Plan 2021–2035

sets requirements for building battery swapping and hydrogen refueling facilities.

Plan 2021–2035 requires improving the convenience of battery swapping services

signiﬁcantly in the next 5 years and building the foundations for a hydrogen fuel

6 ICCT POLICY UPDATE | CHINA’S NEW ENERGY VEHICLE INDUSTRIAL DEVELOPMENT PLAN FOR 2021 TO 2035

supply system by 2035. Still, there are no required numerical targets for these

facilities in Plan 2021–2035.

REGULATIONS AND INCENTIVES

Plan 2012–2020 focused on establishing a set of core regulatory standards and

test procedures for NEVs, parts, and infrastructure. These included regulations for

vehicle product certiﬁcation, vehicle safety, battery reuse and recycling, components

maintenance and testing, and technological standards for charging, hydrogen

refueling, and battery swapping facilities. In particular, Plan 2012–2020 required

establishing and implementing a series of fuel consumption standards for passenger,

light commercial, and heavy-duty commercial vehicles, and related ﬁscal policies. It

also called for ﬁnancial support primarily targeted toward technology innovations,

pilot projects, vehicle production, and the scale-up of government procurement

of energy-ecient vehicles and NEVs. At local levels, Plan 2012–2020 advocated

municipal ﬁnancial support for charging facilities, and battery reuse and recycling.

More importantly, Plan 2012–2020 promised subsidies for pilot programs in the public

ﬂeet and vehicle purchases in the private sector, and the elimination of the business

tax for qualiﬁed companies in the industry.

Plan 2021–2035 enhances the current policies to address some of the recent issues

associated with NEV development (e.g., local protectionism) and expands the

regulatory and technical requirements to include smart driving, shared mobility, and

other emerging industries. It does this speciﬁcally by:

» Shifting from direct subsidies for NEVs to taxation exemptions (e.g., no vehicle

purchase tax and no vehicle and vessel tax), charging subsidies, and parking

incentives, and incentivizing R&D investment from state-owned enterprises

» Enhancing the NEV mandate policy and exploring its integration with the carbon

trading mechanism

» Tightening the NEV vehicle market entrance requirements, and accelerating

the elimination of zombie companies that reap subsidies through forged sales

documents

» Enhancing battery reuse and recycling by establishing the power battery

traceability and management platform for NEVs and accelerating legislation on

spent power batteries

» Encouraging the introduction of local policies to promote shared, intelligent, and

connected mobility

» Other measures to remove institutional and market barriers, including assuring an

open and level domestic market, and enhancing local technical capacity building

and attracting top talent.

IMPLEMENTING ENTITIES

There were four leading ministries for Plan 2012–2020, the Ministry of Industry and

Information Technology (MIIT), the National Development and Reform Commission

(NDRC), the Ministry of Science and Technology (MOST), and the Ministry of

Finance (MOF). Plan 2021–2035 additionally calls for collaborative implementation

from the Ministry of Public Security, Ministry of Ecology and Environment, State

Taxation Administration, China Banking and Insurance Regulatory Commission,

National Energy Administration, and 11 other departments. This underscores the

comprehensiveness of the new plan.

7 ICCT POLICY UPDATE | CHINA’S NEW ENERGY VEHICLE INDUSTRIAL DEVELOPMENT PLAN FOR 2021 TO 2035

Table 2 . Comparison of the New Energy Vehicle Industrial Development Plan 2021–2035 and its ancestral version

Scope

Energy-Saving and New Energy

Vehicle Industry Plan (2012–2020)

New Energy Vehicle Industrial Development Plan

(2021–2035)

NEVs and ICE vehicles NEVs only

NEV market

goals

By 2015:

• Cumulative production or sales of 500,000

BEVs and PHEVs

By 2020:

• Cumulative production or sales of 5 million

BEVs and PHEVs

• Annual production capacity of 2 million BEVs

and PHEVs in 2020

From 2021:

• ≥ 80% newly added vehicles into in public

ﬂeets in key regions must be NEVs

By 2025:

• ~20% share for NEVs in annual new vehicle

sales

By 2035:

• 100% electriﬁcation of the stock of public ﬂeets

• BEVs become the mainstream of new vehicle

sales

Key technology

breakthrough

targets

By 2015:

• Maximum speed of passenger BEVs and PHEVs:

> 100 km/h

• Battery energy density of power cells:

> 150 Wh/kg

• Battery cost: < ¥2/Wh

• Battery life: 2,000 times stable charge and

recharge or 10 years of service life

• Power density of the electric drive system: >

2.5 kW/kg

• Electric drive system cost: < ¥200/kW

By 2020:

• Battery energy density of power cells:

> 300 Wh/kg

• Battery cost: < ¥1.5/Wh

By 2025:

• Average electricity consumption of new

passenger BEVs: ≤ 12.0 kWh/100 km

By 2035:

• NEV core technologies reach world-class levels

Industry development

focus

Focused on the NEV supply chain and derivative

business models

Focuses on the entire industrial value chain and

cross-industry collaboration

Charging infrastructure

• R&D of core technologies that meet basic

needs

• Explored future technology roadmap, industrial

development path, and business models

through pilot programs

• R&D of novel and high-tech charging

technologies to avoid bottlenecks

• Guides long-term planning and short-term

deployment of charging facilities

• Requires increasing facility compatibility and

information sharing

Battery swapping and

hydrogen refueling

facilities

• R&D of technologies and exploration of

business models

• Sets short- and long-term requirements for

related industries

Regulations, incentives,

and other policy

support

• In

troduced technical standards for the NEV

industry, including market entrance, vehicle

safety, battery, components, charging,

swapping and refueling

• Established fuel consumption standards for

light- and heavy-duty vehicles

• Subsidies and tax incentives for pilot programs

• Shift from upfront vehicle subsidy to a range of

incentives during ownership and use

• Enhance the NEV mandate policy and explore

its integration with the carbon trading

mechanism

• Tighten the NEV manufacturer market entrance

requirement and eliminate zombie companies

• Enhance battery reuse and recycling

• Promote shared, intelligent, and connected

mobility

Implementing

entities

• MIIT, NDRC, MOST, and MOF

• Local governments

• MIIT takes the lead, and another 20

departments are involved

• Local governments