China To Ban All Petrol And Diesel Cars? Seriously?

Donn Bailey profile picture
Donn Bailey


  • One Chinese Minister's remarks send Tesla shares $20 higher on 9/11.
  • When exactly could this ban happen? Not in my lifetime for sure.
  • Teslanomics at work, yet again.

It really does not take much at all to send Tesla Inc (NASDAQ:TSLA) bulls rushing to hit the "buy" button. But before everyone rushes to follow suit let's review some facts that make this "announcement" by a Chinese vice minister of Industry unrealistic for at least 30-35 years. Of course, he gave no timetable during his comments with the press. But the press blamed the TSLA price spike on this "news."

China already has announced the following time tables:

2018: 8% of all vehicle production to be New Energy Vehicles (NEVs).

2020: 2% increase to 10% of 2018 goal

2022: An additional 2% bringing the total to 12% of all vehicles sales to be NEVs

2025: 20% of all new cars sales to be NEVs.

2050: 100%?

That is the official time table at this point that manufacturers are marching toward. It is the same one they are all grumbling about for the simple reason they do not want to be forced to build more cars than buyers are ready to purchase. I actually believe these numbers could be realistic, with some incentives, for a country that leads in NEV production. So what is a realistic timeline for 100%? Certainly no time soon.

(Chinese traffic jam. Source: NPR)

So exactly what is a New Energy Vehicle? Wikipedia has the definition here. NEVs include both hybrid and pure BEV models. They are any car that gets at least some of its drive energy from a battery.

China leads the world already in this area. In 2016 sales of NEVs totaled 507,000, up from just 8,159 in 2011 and 352,000 in 2015. The Chinese Association of Automobile Manufacturers estimates sales could hit 800,000 units in 2017.

In 2016, China's car sales topped 28,000,000. That means NEV sales were just 1.8% of all sales. Sales

This article was written by

Donn Bailey profile picture
Donn is Co-Manager of his family-controlled investment portfolio of mortgages, real estate, and publicly traded stocks. Donn grew up in Mexico and Ecuador before moving to the U.S. for college. He holds a Bachelor's degree in Business Management. He spent a decade in the aerospace industry before his passion for cars took him to GM and Ford dealerships. An avid ocean fisherman, he "semi-retired" to Florida in 2015. Never idle, he stays busy now as a licensed realtor and author on the real estate and auto industries.

Disclosure: I am/we are short TSLA VIA OPTIONS. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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