China Cuts E-vehicle Subsidies

April 14, 2019 | 05:48
China Cuts E-vehicle Subsidies
China Cuts E-vehicle Subsidies
The e-vehicle industry will certainly be hit hard by the latest decision of the Chinese government to cut subsidies for the purchase of electric vehicles by more than half. As of June, the Chinese state subsidy for an electric car — now worth $9,830 — will be cut to around $4,100. To qualify for any subsidy at all an electric vehicle must now have a specified range of at least 250 miles. Over the next three months they will also abolish local government subsidies and channel these funds into improving the country's charge-station infrastructure.

China raises the bar for subsidies

China's electric car market accounts for a good half of the world market, so the subsidy cut for the production of electric cars will have an impact worldwide. Many foreign car manufacturers such as Ford, GM, Mercedes, Audi, Nissan, Peugeot, Jaguar, Hyundai and Mazda have production agreements in China, which will then be significantly less attractive.

The overall strategy is to encourage innovation in China’s car manufacturing industry and develop improved technology to keep its products competitive. The statement from China’s Ministry of Finance lists a number of goals to promote the production of higher-quality vehicles with longer range. The Chinese electric vehicle company BYD has also announced it will be investing around $1.5 billion in a new battery giga-factory able to produce 20 GWh of battery cells per annum to power its range of electric vehicles.
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