China is working on changing the new energy vehicle (NEV) mandate policy, also known as dual credit policy, in an effort to close an emissions loophole that automakers were exploiting.

Why it matters: Automakers in China piled into the electric vehicle market in response to incentives created by local governments which, in its calculus, weighted the production of electric vehicles five-to-one.

The Chinese government had previously set a goal that all-electric vehicles should make up around 20% of total car sales in 2025, which means most of the balance would be gas-powered.

Analysts say that the policy change signals a renewed emphasis on gasoline-electric hybrid vehicle, which had been excluded from purchase subsidies for new energy vehicles in China.

Details: China’s Ministry of Industry and Information Technology (MIIT) released a modified version of its NEV policy on Tuesday, which stipulates that fuel-efficient vehicles could offset 20% of the credits set for corresponding electric cars.

Effective beginning April 2018, the earlier rule specified that each vehicle be assigned a specific number of credits depending on its energy-saving efficiency level.

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