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China’s clean vehicle policy – the ‘new energy vehicle mandate’ – requires carmakers to obtain credits for the production of EVs that are equivalent to 10% of the overall passenger car market in 2019 and 12% in 2020. Considering the credit structure, the 2020 goal would translate to zero-emission vehicles being around 4% of actual vehicle sales. In November last year, the European Commission proposed new car CO2 reduction targets of 15% and 30% in 2025 and 2030 respectively, but fell short of any meaningful sales target for zero-emission vehicles. EU environment ministers meet next Monday (25 June) to discuss the ambition of the proposal with many countries expected to push for a strengthening of it.

Julia Poliscanova, clean vehicles manager of Transport & Environment, said: “China bet decisively on electric cars and is winning the race. It understood that production follows demand, and demand is created with smart, ambitious industrial policy. But Europe still can’t shake off its dirty diesel legacy. The EU ministers have two choices: either we set an EV sales target to keep auto jobs at home, or allow European carmakers to go on selling dirty diesels here while investing the earnings into EV production abroad and importing back made-in-China electric cars.”

Volkswagen, Daimler and Renault-Nissan are racing to invest in Chinese EV production. The largest European carmaker, the Volkswagen Group, leads the pack with a €10 billion joint venture with Chinese Anhui Jianghuai as part of its Roadmap E initiative to increase EV sales to 1.5 million globally by 2025. Nissan has pledged €8 billion as part of a ,joint venture with Renault and Dongfeng in a bid to become the dominant EV maker in China. Daimler AG teamed up with China’s BAIC in a venture worth €1.6 billion to expand the production of Mercedes-Benz EVs to a new facility in Beijing.

Carmakers have been clear that the strong Chinese vehicle mandate is the driver of their investments. A VW spokesperson told Bloomberg that the policy “perfectly fits our recently announced roadmap for electric vehicles.” Following its decision to produce the electric Mini in China, BMW said it was following a key business axiom: “Production follows the market.”

A recent study by Cambridge Econometrics – endorsed by BMW, Renault-Nissan, Valeo, ABB, trade unions, consumer group BEUC and green NGOs – concluded that 206,000 net jobs could be created in the EU through a shift from fossil-fuel powered vehicles to ones driven by renewable energy by 2030 [1]. But for this to happen strong regulations are needed to drive the industry to invest here. T&E estimates that if electric cars are largely imported into Europe by 2030 a third of manufacturing jobs could be lost.

Julia Hildermeier, electromobility officer of T&E, said: “The EV race has just started. The Chinese have a headstart because of their ambitious zero-emission vehicle mandate. But it was only last year when China introduced the law. Europe can catch up quickly too. The European Parliament and EU governments can do so by setting a binding 20% CO2 reduction target for 2025 CO2 standard coupled with an EV sales target.”

Cars and vans account for two-thirds of carbon emissions from transport, which is the highest emitting sector in the EU with 27% of total CO2 emissions. Transport is the only sector whose climate impact has grown since 1990.