China Expected To Slash EV Subsidies By 30% Next Year

DEC 27 2018 BY WADE MALONE 22

The Chinese government reportedly plans to end subsidies in 2020.

China’s new energy vehicle (NEV) initiatives aim to help electrics reach 20% of the automotive market by 2025. The Chinese government first began a pilot NEV subsidy in 2010. In the years that followed, available subsidies expanded significantly.

As a result, Chinese NEV sales have skyrocketed. In 2017, China surpassed 750,000 plug-in sales. The country is likely to exceed 1 million units in 2018. Although for much of this time, the subsidy has gone primarily to Chinese automakers. Historically, foreign brands such as Tesla have suffered high tariffs and received no subsidy.

However, overall uncertainty is becoming more frequent for both foreign and domestic brands. Earlier this year, large, long range electrics were given a small 10% subsidy boost. But short range vehicles saw subsidies cut by ~60%. Sources told the Nikkei Asian Review that more major changes are coming in 2019 and 2020. “Next year’s subsidies will likely be reduced by approximately 30%,” according to a spokesperson from the China Association of Automobile Manufacturers.

This has been echoed by reports at the Securities Times and statements from automakers. One Chinese automotive executive was quoted as saying “If subsidies for popular models are steeply reduced, sales could soften.”

China electric car sales through 2018

China had long indicated it would be lowering and ultimately eliminating subsidies. Although the timeline is moving more quickly than originally anticipated.

According to Nikkei, the program will be eliminated by the end of 2020. Most major Chinese automakers and foreign brands will be able to offset the subsidy loss. Of course, that doesn’t mean the constant adjustments won’t be painful to navigate. Many small electric automakers will find it more difficult to survive.

Source: Green Car Congress

Categories: BYD, China, Tesla

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22 Comments on "China Expected To Slash EV Subsidies By 30% Next Year"

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If there is a requirement to sell a proportion of EVs then manufacturers might need to charge more for ICE cars to subsidise sales of EVs themselves and meet targets. It’s not as bad as it sounds.

That works for companies that are making a mix of ICE and EVs. Seems like it punishes those making only EVs.

EV-only companies can sell their credits for cash.

Right, so the EV company will get income from other companies whose credit is not enough.

The main push for the increase of the number of EV sales in China in the next few years will be the quota requirement. The car manufacturers have to comply to the rules set by the Chinese government and sell a certain number of EV’s in China each and every year. The car manufacturers will now have to offer their EV models at competitive prices (compared to the ICE models) in order for the buyers to choose an EV model instead of an ICE model. It will be very interesting to see how they will manage to achieve the required number of EV sales each and every year.

The Chinese government has more levers that they can pull in order to achieve the results that they are aiming for. They can increase the price of fuel a little bit, for example, in order to make it more expensive to drive in ICE models. That would also be an incentive to choose an EV model instead of an ICE model. I’m just saying that the Chinese government has already made up their mind and they will achieve what they are aiming for. Step by step.

Initially, they used to give subsidies for all EVs (plug-ins and BEVs). From 2018, they removed the plug-ins with less than 50 KMs range and BEVs with less than 150 KMs range. They also made changes based on battery density. Higher the range and bigger density means more subsidies for that vehicle. There is some news that, from 2019 they are removing subsidies for plug-in hybrids completely. They are also removing subsidies for BEVs with less than 200 KM range. China want their companies (battery makers and vehicle manufacturers) to improve their technology and competitiveness and the subsidies aligned towards that goal. From 2019, EVs in China will go mainstream. There will be tens of new models (if not more than hundred) from many companies, at prices as low as $8,700. Here is an example. Great Wall Motors is one of the big Chinese brands. They have an exclusive EV brand named ORA. They just released ORA R1. ORA R1 Specs: 33 KWh battery 192 – 217 miles (NEDC). EPA range will be about 135 miles to 150 miles. Similar in size to VW UP with slightly larger wheelbase. ORA R1 priced starts at RMB 59,800 ($8,700) and high end… Read more »
Do Not Read Between The Lines

With the 10%+ credit mandate (far from 10%+ of sales), and the state of the industry and pricing, they won’t need the subsidies.

But, I think the main driver for it is that they want to be an exporter. As long as they retained their protectionism, they’d be facing retaliatory action by other countries.

Wade,

Does this subsidy cut also apply to HFCVs, the red-headed stepchild of the NEV family? Under its “Made in China 2025” initiative, China is pushing very hard to spur its nascent hydrogen fuel cell industry to overtake the current leaders, Japan, Korea, and the U.S., by 2025.

Only CARB has been suckered by Big Oil about Hydrogen.

CARB has become a joke.

stop trying to hijack story after story to insert your fuel cell crap.

“China is pushing very hard to spur its nascent hydrogen fuel cell industry…”

Nobody is buying the Big Oil shilling B.S. you’re shoveling out. Stop wasting your time, and ours.

Oil Industry Gets to the Chinese Government.
But, good for American EV Production and TESLA.

That’s an interesting conspiracy theory you came up with there Joe, and your use of capital letters certainly adds to its credibility. It appears that the Oil Industry has also gotten to the German government where 53 hydrogen stations are now open, and 400 are planned for 2023.

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I hope they can find a use for these later for maybe re-purposed niche industrial vehicles. I doubt they would take off for consumers for obvious reasons.

Hopefully by 2023, if not sooner, Germany will have ceased wasting taxpayer money on a boondoggle which will benefit no one other than Big Oil.

I expect the pattern of building H2 fueling stations in Germany will follow that in California: those supporting the “hydrogen economy” hoax will keep predicting hundreds more stations opening “real soon now”, while the reality lags further and further behind their propaganda fantasy as the years pass.

https://insideevsforum.com/community/index.php?threads/how-to-promote-the-hydrogen-economy-hoax.429/

seriously? U think that ANY citizens are going to switch to H2?
What H2 are you driving now?

if battery cost and electric drivetrain cost reductions have cut the gap between ICE and EV by 30%, then this is exactly what should be happening.

As per the latest bloomber report the price of battery now is $176 / KWh and this is average which means a company like Tesla should be producing at the cost of around $120 – $130 / KWh.
No wonder the price of electric vehicles are falling. As mass production accelerates, the price will fall much faster and at $100 / KWh, an EV may cost as low as gasmobile.

“BNEF found found that the volume-weighted average price of a lithium-ion battery pack is $176/kWh.”

https://www.bloomberg.com/news/videos/2018-12-21/bnef-brief-lithium-battery-prices-fall-18-percent-video

“…a company like Tesla should be producing at the cost of around $120 – $130 / KWh.”

If you mean the pack-level cost, that’s probably about right.

There isn’t any magic formula needed for BEVs to make gasmobiles obsolete. All BEVs need, to be cheaper than gasmobiles even in the cheapest market segments, is for large numbers of BEVs to be made. The economy of scale will bring the prices down below comparable gasmobiles within a few years. Those who think that won’t happen need a history lesson.

We do need battery tech breakthroughs in making batteries which can be charged a lot faster. But we don’t need any tech breakthroughs to bring the price down. Economy of scale is already doing that just fine.

Looks like they’re balancing the carrot with the stick. Less subsidies mixed in with rising percentage requirements.

If you didn’t cash in on the early rewards, prepare to pay fines later if you fall behind.

This is the problem with depending on the Chinese central government to subsidize and incentivize the EV revolution: The fact that China has strong central political control means it has been easy and quick for them to put EV incentives in place… and it’s just as quick and easy for them to reduce or end such incentives, for any reason or none.