There is a car in China that yields a measly USD 13 in profit for its manufacturer, yet the model isn’t about to be discontinued anytime soon.
Let’s back up a bit. We frequently hear that China is the largest automobile market worldwide in terms of both supply and demand. With top-down encouragement for the production and purchases of electric vehicles, every automaker in the country is developing its own line of EVs.
Plug-in cars are more than just vehicles—they’re also a high-value product that are meant to lower overall emissions. Given that the Chinese government has a goal to make the country carbon-neutral by 2060, EVs are an important component in this plan. They will eventually be used by 1.4 billion people who need to commute on public and private transportation.
To make EVs mainstream, regulators introduced two types of “credits” to track the transition from internal combustion engines to battery-powered movement. Like carbon credits, they can be bought and sold by automakers. Consequently, even if an EV is dirt cheap, it may give its manufacturer a secondary channel to earn revenue—by selling these credits.
36Kr Global’s research team took that as a starting point to unpack everything you need to know about China’s “dual credit system” for steering automakers toward electrifying their cars. It’s a long read that is packed with data. Check it out here.
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