(Yicai) Sept. 11 -- China has set a goal for new energy vehicles to account for 70 percent of passenger vehicle sales by 2030, while new energy commercial vehicles are expected to make up 40 percent of commercial vehicle sales, according to a five-year development plan for intelligent connected new energy vehicles released by the Chinese government yesterday.

This industrial development plan, issued by the Ministry of Industry and Information Technology and eight other central government departments yesterday, also aims for the overall auto industry to reach peak carbon emissions by 2030 and to accelerate the green and low-carbon transformation of the automotive supply chain.

It also called for stronger monitoring and regulation of production capacity in the automobile and power battery industries. It aims to phase out outdated and inefficient capacity in an orderly manner through market-based and legal mechanisms, thereby improving overall capacity utilization across the industry.

China’s auto sector is currently operating below what is generally considered the healthy capacity utilization threshold. Data previously released by the National Bureau of Statistics showed that capacity utilization in the car manufacturing industry fell to about 70.3 percent in the first quarter, before edging up to 70.8 percent in the second quarter. Both were lower than the generally accepted healthy manufacturing benchmark of 75 percent.

The five-year plan calls for capacity monitoring and regulation in the automotive industry and extends such measures to key components, including power batteries, Cui Dongshu, head of the China Passenger Car Association, told Yicai. On the one hand, this could raise the entry threshold for newly established independent automakers and curb the launch of unnecessary new projects at an early stage. On the other hand, it also signals the government’s support for mergers, restructuring and cross-regional consolidation within the industry.

The government’s approach is not to restrict reasonable capacity expansion, but to provide early warnings and guide production capacity to better match market demand, thereby preventing destructive price wars among industry players, Cui said.

The document also calls for autonomous driving functions to be deployed and adopted on a large scale by 2030. It aims for vehicles equipped with autonomous driving systems to achieve significantly higher safety performance than human drivers, and for highly automatic driving to be realized on highways, urban expressways and certain city roads.

The plan reiterated that China will support foreign companies in expanding their operations in the country and fully implement national treatment for foreign-invested firms. Domestic and foreign companies will be treated equally in government procurement and other activities.

The government also encourages Chinese and overseas firms to deepen cooperation in the research, development and investment of vehicles and key components to speed up product upgrades and jointly explore global markets, according to the plan.

New energy passenger vehicles accounted for 54 percent of passenger vehicle sales in China in 2025, according to data from the China Association of Automobile Manufacturers, while new energy commercial vehicles made up 26.9 percent.

Editors: Tang Shihua, Kim Taylor