The second phase of China’s new energy vehicle mandate policy for passenger cars

The second phase of China’s Parallel Management Regulation for Corporate Average Fuel Consumption and New Energy Vehicle Credits began on January 1, 2021. The policy regulates how both corporate average fuel consumption (CAFC) credits and new energy vehicle (NEV) credits are calculated and traded. This paper describes the contents of the Phase 2 policy and highlights the differences from the Phase 1 policy, which was in effect through the end of 2020. In China, NEVs include battery electric vehicles (BEVs), plug-in hybrid electric vehicles (PHEVs), and fuel cell electric vehicles (FCVs). Additionally, in early February 2021, China announced a revised process for accounting for credits generated in 2020, and this paper includes details of that announcement.