Change of mind: China to retain local EV subsidies
In a change of heart, China’s government is pondering to allow provinces to continue with local subsidies for EVs to sustain the rising demand for new energy vehicles in the country, Bloomberg quotes sources close to the matter.
The government in Beijing had wanted to stop local governments offering subsidies for NEVs in a move to discourage protectionism and rein in state expenditure. However, in the latest amended nationwide policy that’s in the final stages of discussion, local funding would continue to be capped at 50 percent of the aid provided by the federal government, sources close to the talks told Bloomberg.
Apparently, policy makers are now concerned that phasing out the funding would undermine the development of the new energy vehicle sector. If the new rules will get through, Chinese consumers could make significant savings. When purchasing the BYD e5 for example, a buyer can save as much as 75,000 yuan (about 9,660 euros) after the central and local government fundings.
China’s central government has been trying to regulate its new energy vehicle incentives in a more orderly way overall. Subsidy fraud had led to a plan for more refined rules and a clearance of the list of eligible carmakers recently.
Another reason for this latest consideration is Beijing wanting to curb expenses. According to the China Passenger Car Association, China has spent 59 billion yuan through 2015 on NEV rebates, and it may need to set aside 83 billion yuan more for 2016 and the current year. The association expects EV sales to grow by another 50 percent in 2018 to over a million units.