As discussed in our previous article on the topic, China’s new 14th Five-Year Plan is a vast document that outlines the country’s ambitious plans for the 2021-2025 period. Technology and the environment are two main themes of the plan, with several chapters dedicated to describing how China’s leaders hope to steer the country into an innovation-driven economy and pursue high-quality and sustainable development. New automobile technologies—new energy vehicles (“NEVs”) as well as intelligent connected vehicles (“ICVs”)—lie at the intersection of these two themes.
The next five years will be a critical period in policymaking and product adoption that will shape the trajectory of the world’s largest market for automobiles, so it is important that companies in or affected by Chinese policy for the new energy vehicle industry take note of the policy signals in the 14th Five-Year Plan along with those in the State Council’s important October 2020 blueprint for the development of the NEV industry through the year 2035. Further, with Chinese policy evolving quickly, it is critical to monitor local and sectoral policies and programs designed to implement the national plan. We have prepared this article to serve as a starting point for understanding these efforts. (See our piece focusing on semiconductor industry policies during the 14th Five-Year Plan period here.)
The new energy vehicle industry features prominently in multiple sections of the 14th Five-Year Plan. In one key section the plan includes NEVs on the list of “strategic emerging industries” and aims to increase the collective value-added of strategic emerging industries to more than 17% of GDP by 2025. Goals for strategic emerging industries include:
- accelerating the innovation and application of key and core technologies;
- enhancing government provision of factors of production;
- developing strategic emerging industry clusters;
- encouraging corporate mergers and reorganizations; and
- financial support through industrial investment funds and financing guarantees.
Where the Action Is: Local and Sectoral Plans
Although the five-year plan’s targets and goals are high-level, ministries and local governments study it carefully when formulating their own plans and policies. The way central and local officials implement these guidelines—e.g., via their own plans (some of them also called 14th five-year plans), policies, measures, and programs—will determine the actual opportunities and risks for foreign and domestic companies in the market. A small sampling of such efforts in the NEV area that stem from or coincide with the national 14th Five-Year Plan are listed below:
- Stricter Quality Supervision and Higher Standards – According to the Xinhua News Agency, the Ministry of Industry and Information Technology (“MIIT”) plans to further strengthen the supervision of NEV quality; promote the integration of electric vehicle, intelligent networking, and other technologies; and raise industry standards according to market conditions, with a particular focus on user experience. On the ICV side, MIIT established an Intelligent Connected Vehicle Promotion Group (ICV-2035) to address major issues and accelerate industrial development.
- MOST National Key R&D Program – In February 2021, the Ministry of Science and Technology (“MOST”) issued the Guidelines on Applying for Key Projects of New Energy Vehicles in 2021 (Draft for Comments). The Guidelines set out technologies of interest in the NEV space for participation in MOST’s National Key R&D Program . These technologies include, but are not limited to, all-solid-state lithium-metal battery technologies and all-climate battery technologies.
- Beijing 14th Five-Year Plan – Beijing’s plan for the 14th five-year period (2021-2025) includes efforts to promote electric and intelligent vehicles, optimize the layout of electric vehicle charging and battery swapping networks, and accelerate the planning and construction of hydrogen refueling stations. The goal is for Beijing to have 2 million NEVS on its streets by 2025. A separate document listing the Beijing government’s key tasks in 2021 (available here) mentions plans for a new energy intelligent vehicle industry cluster and production base to be established in Beijing’s Shunyi District, and states that NEVs will account for no less than 80% of newly added or replaced buses, taxis, delivery vehicles, and other public sector vehicles in 2021.
- Shanghai 14th Five-Year Plan – Shanghai’s 14th-Five-Year Plan also aims to accelerate the development of the NEV industry, especially fuel cell vehicles, and form an industrial chain for key components. The plan requires that by 2025, NEV output value will account for 35% of Shanghai’s automobile manufacturing industry, and that all of the newly added or replaced buses, taxis, and other public sector vehicles will be NEVs. Jiading District, the traditional powerhouse of Shanghai’s automobile industry, has been designated as a home to new NEV and ICV industry clusters. Shanghai also aims to build an intelligent vehicle innovation development platform that will lead the nation in the ICV demonstration and pilot projects.
- Guangdong Province Action Plan for the Development of the Automobile Industry for the 14th Five-Year Period – Guangdong Province, home to many automobile manufacturers, has announced a fairly comprehensive automobile industry development plan for the 2021-2025 period. In addition to general goals to develop the industry, the action plan sets out many numerical goals. For instance, it states that by 2025, automobile output in Guangdong should exceed 4.3 million per year, accounting for more than 16% of China’s overall automobile output, and including over 600,000 NEVs. The action plan also sets out key tasks and specific plans for this effort, and calls for strengthening organization and coordination, increasing policy support, improving financial support, promoting talent development and recruitment, and enhancing the role of industry associations.
- Tianjin 14th Five-Year Plan – Tianjin’s plan for the 14th five-year period names several key sectors including NEVs and ICVs, and discusses ways of developing these key sectors by formulating a list of key technologies and carrying out research projects aimed at mastering them, especially those that currently require a high level of dependence on foreign countries. The plan designates the Binhai New Area to serve as a base for strategic emerging industry clusters.
- Jiangsu Province 14th Five-Year Plan – Home to major cities such as Nanjing, Suzhou, and Wuxi, Jiangsu Province’s 14th Five-Year Plan focuses on cultivating industrial chains for 50 key industries and products, including AI, power batteries, NEV charging stations, and hydrogen fuel cell vehicles. The plan also states that Jiangsu will support cities like Wuxi in building national pilot areas for ICVs, installing electric vehicle charging infrastructure, and improving the arrangement of urban and intercity charging facility service networks.
- Fujian Province 14th Five-Year Plan – Home to major cities such as Xiamen, Fuzhou, and Longyan, Fujian Province aims in its 14th Five-Year Plan to develop a full NEV industry chain and create well-known automobile brands. It also declares its intention to build the most competitive NEV industry base on the southeastern coast of China. Among other elements, the plan focuses on supporting the research and development of long-life and high-safety power batteries, promoting NEV purchases, and accelerating the construction of electric charging and hydrogen fueling infrastructure.
- Shaanxi Province 14th Five-Year Plan – Shaanxi Province, home to the city of Xi’an, aims to build an NEV production base of national-level importance. Its strategy is to use key enterprises such as the Shaanxi Automobile Group Co., Ltd., BYD, and Shaanxi FAST to develop the province’s NEV ecosystem by attracting suppliers and manufacturers of batteries, motors, electric controls, sensors, and on-board operating systems. The plan also names the Xi’an Hi-tech Industries Development Zone, Xi’an Economic and Technological Development Zone, and Baoji Hi-tech Industries Development Zone as bases for the development of the NEV industry.
Companies with business interests affected by Chinese NEV policies should carefully monitor local and sectoral developments to determine how best to navigate this rapidly evolving terrain. They should also consider engaging with Chinese policymakers where necessary to express their needs or share industry best practices.