The government in Beijing is looking at a further reduction in new energy vehicle subsidies in 2019. They want carmakers to become less dependent on state funding and to innovate instead. As with previous programmes, the new policies would emphasise range and efficiency.
The plan is not public but Bloomberg quotes sources close to the matter. They expect the electric vehicles may be required to be able to go at least 200 kilometres (125 miles) on a single charge to be eligible for incentives, up from 150 km currently.
Overall, the average incentive per NEV may be lowered by more than a third from the 2018 levels, said the sources. The plan may still be subject to change though.
The new policies would fit the course the Chinese government has been taken for some time now. Last November, Beijing tightened regulation, making them dependent on range. The new rules excluded new energy vehicles with a range below 150 km but increased funding for EVs above 300 km (we reported). It is to be expected that Beijing will continue sticking out the hand holding a carrot.
However, there is also a stick. Part of the reason to cut subsidies in 2016 for the first time was rampant fraud and the repercussions are still being felt. Battery maker Shenzhen OptimumNano Energy for example has suspended production for six months today amid a sharp drop in orders since the change in policy reportedly.