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China is preparing to cut electric vehicle incentives this year

 

China is planning to minimize the subsidies on new electric vehicles by 20% this year. The Ministry of Finance of China revealed this strategy to prepare electric vehicle developers and consumers for such measures. To be specific, the subsidies imposed on new vehicles in the transportation industry like new buses, passenger vehicles, taxis, delivery vehicles, trucks, crossovers, public utility vehicles, and government-owned cars will reduce by 10% to spearhead the transition to electric vehicles. Moreover, the Ministry explained that the car developers would have to adhere to the existing technical prospects like battery energy density, mileage range, and energy uptake through this year. For example, the lowest standard battery-electric vehicle will be expected to have a mileage range of 300 kilometers to enjoy the $2500 to $3000 subsidy. On the other hand, a plug-in hybrid electric vehicle with a mileage range of 50 kilometers will receive a $1250 subsidy. 

Moreover, the government will harden its stance on the adherence to safety measures for the new energy vehicles. For instance, the subsidies will be lifted or rendered null and void if the manufacturer is found culpable in leading to accidents due to insufficient safety measures or not adjusting their product after finding them to be problematic. Additionally, the government stated that stringent standards would be implemented to suppress investment and unauthenticated development of new energy vehicles to minimize the pressure on the existing roads and other resources. Other strategies include overseeing the quantity manufactured, establishing entry regulations for vehicle models and car manufacturers entering the market. Furthermore, the manufacturers who are expanding their operations, merging with other companies, and restructuring their operations will inform the appropriate agencies to facilitate city planning. 

China has witnessed the production and purchase of new energy vehicles plummeting over the last two years after Beijing sequestering the subsidies and a sluggish economic growth rate. The coronavirus pandemic, which began last year, also impeded the growth of the NEV sector. The government revealed that it would extend the subsidies on the new energy vehicles for the next two years to accelerate the recovery of the NEV adoption process after the pandemic weighing in on this sector. Initially, the subsidy reduction plan was to kick off last year but is switching to this year and will be reducing by the addition of 10% to the existing rate through time. Last year, the government intervened to accelerate the uptake of the vehicles. These efforts are visible in the 3.9% rise in sales of these NEVs per the report submitted by China’s automotive manufacturer’s association.