China will not make significant cuts in subsidies for electric cars this year. This was announced by Miao Wei, China’s Minister of Industry and Information Technology.
The Chinese government had cut its subsidies significantly in mid-2019, and a further cut was expected in July this year. This will not happen, as the MIIT ministry confirmed shortly after Wei’s statement at an event, also to Chinese media. An MIIT spokesman told the government-affiliated Beijing News that “this year’s NEV subsidy policy will remain relatively stable and there will be no significant cuts”.
Even if the expected cut in July is cancelled, this does not mean an extension for the subsidy programme: Next year, the premiums in China for battery electric vehicles are to end in the same way as those for fuel cell cars, as reported.
As expected, the industry reacted positively to the ministry’s announcement. Miao’s speech was the “best news,” He Xiaopeng, managing director of EV startup XPeng Motors, told Reuters, adding that political stability was crucial for the industry. Ji Hua, deputy managing director of Aerospace Engineering Equipment, told Global Times that it was “important news for the NEV sector”.
The reduction of subsidies in July 2019 has had a major impact on the NEV market. Sales fell, in some cases sharply – despite growth in the first half of the year, only 1.2 million New Energy Vehicles were sold in 2019, some 100,000 fewer than in 2018. It was the first decline in many years.
In July, Chinese central government subsidies for electric cars with a range of 400 kilometres and more were halved from 50,000 to 25,000 yuan (6,600 to 3,300 euros). Since then, electric cars with a range of fewer than 250 kilometres have been going completely empty. Previously, the minimum range was 150 kilometres. Apart from this subsidy from the central government, other municipal subsidies are also possible – although these were also cut back sharply in 2019. They have already been completely cancelled in Beijing.