China is introducing new rules aimed at increasing sales of hydrogen vehicles

BEIJING (Reuters) – China, the world’s largest auto market, has rolled out a new policy to support hydrogen fuel cell vehicles, aiming to improve the industry’s supply chain and technology, the finance ministry said on Monday.

China is also the world’s largest market for new energy vehicles (NEVs), which includes battery electric vehicles as well as plug-in hybrid and hydrogen fuel cell vehicles.

While previous policies to support NEV manufacturers offered sales subsidies, the new implementation will require local governments and companies to build a more mature supply chain and business model for the industry.

According to the document, local governments and companies must prove that joint projects are able to reduce the price of hydrogen fuel, increase the number of hydrogen charging stations, expand the fleet of hydrogen fuel cell vehicles and improve related technologies.

The ministry said that authorities will award awards to projects after assessing key performance areas.

The changes come days after Reuters reported, citing people familiar with the matter, that Chinese policymakers and the government may release a new policy.

There are more than 7,000 hydrogen-powered vehicles in operation in China, while the number of pure battery electric vehicles and plug-in hybrid vehicles exceeds 4 million.

Global car manufacturers including Toyota Motor <7203.T> and Hyundai Motor <005380.KS>have already announced plans to introduce hydrogen vehicles in China.

(Reporting by Yilei Sun and Brenda Goh, editing by Sherry Jacob-Phillips)