China Fossil Fuel Deadline Shifts Focus to Electric Cars

China will set a deadline for automakers to end sales of fossil-fuel-powered vehicles, becoming the biggest market to do so in a move that will accelerate the push into the electric car market led by companies including BYD Co. and BAIC Motor Corp.

Xin Guobin, the vice minister of industry and information technology, said the government is working with other regulators on a timetable to end production and sales of fossil-fuel-powered vehicles. The move will have a profound impact on the environment and growth of China’s auto industry, Xin said at an auto forum in Tianjin on Saturday, Bloomberg reported.

The world’s second-biggest economy, which has vowed to cap its carbon emissions by 2030 and curb worsening air pollution, is the latest to join countries such as the UK and France seeking to phase out vehicles using gasoline and diesel. The looming ban on combustion-engine automobiles will goad both local and global automakers to focus on introducing more zero-emission electric cars to help clean up smog-choked major cities.

“The implementation of the ban for such a big market like China can be later than 2040,” said Liu Zhijia, an assistant general manager at Chery Automobile Co., the country’s biggest passenger car exporter that unveiled a new line for upscale battery-powered and plug-in hybrid models at the Frankfurt motor show last week. “That will leave plenty of time for everyone to prepare.”

While many global manufacturers from billionaire Elon Musk’s Tesla Inc. to Nissan Motor Co. and General Motors Co. are racing to grab a slice of the electric-vehicle market in China, it is the local manufacturers that have found considerable success thanks to generous government subsidies.

Warren Buffett-backed BYD led the pack in sales in the first seven months of this year, delivering 46,855 electric and plug-in hybrid vehicles, according to the China Passenger Car Association.

Beijing Electric Vehicle, the EV division of state-owned BAIC Motor, followed with 36,084 units. In comparison, General Motors has sold 738 cars run on electricity since it launched the Velite 5 plug-in hybrid model at the Shanghai auto show this April. That is 0.04% of its 2.1 million vehicles sold in total in China during the seven months.

Besides subsidies that also are aimed at meeting the strategic goal of cutting expensive oil imports, the government plans to require automakers to earn enough credits or buy them from competitors with a surplus under a new cap-and-trade program for fuel economy and emissions.