The cost of producing new energy vehicles will be close to that of ordinary fuel passenger vehicles by 2030, and market competitiveness will also be equal, Caixin reported, citing Dai Jiaquan, Director of the Research Institute of China National Petroleum Corporation on Wednesday.

“The cost of batteries for new energy vehicles will be reduced from the current 1,700 yuan / kWh to 700 yuan / kWh by 2030. By then, the batteries can replace nearly 25 million tons of oil, or around 6.7% of the total amount of refined oil,” Dai said.

According to Dai’s study, automobile manufacturers in China were encouraged to produce more new-energy vehicles after the launch of the new energy vehicle double-point system in September. On the demand side, the government subsidy will be weakened but restrictions imposed on fuel vehicles will also boost demand.

Dai said that at present, the development of new energy vehicles is highly sensitive to policy changes, and the market has not yet played a decisive role.

For example, a proportion of electric vehicles were greatly enhanced during the subsidy period, but decreased significantly again when the subsidy was reduced. “This reflects the uncertain policy outlook,” Dai said.

According to the government’s plan, China hopes to reach a total production volume of 17 million units of new energy vehicles by 2025.