The Chinese automotive market is experiencing huge changes - mainly because of the significant decrease of general car sales, and secondly because of the decrease of subsidies on New Energy Vehicles (currently plug-ins).

The government announced on March 26 decrease of subsidies for electric cars by 67%. The minimum required electric range increased to 250 km (155 miles), while cars with 400 km (249 miles) of range (NEDC) will get 25,000 yuan ($3,700), half of the previous amount.

After 2020, subsidies will be completely phased out, which could have a tremendous impact on profits for plug-in car manufacturers.

Interestingly, China Daily Mail reports that China is now exploring hydrogen fuel cell cars, gearing up to support R&D and rollout.

We remain skeptical because the target of the cumulative number of FCVs is still small compared to current plug-in car sales:

  • 5,000 in 2020
  • 50,000 in 2025
  • 1 million in 2030

The question is whether it's wise to switch to another technology, especially when carmakers are already investing in plug-ins and dealing with a decrease in conventional sales, which makes business pretty difficult.

Source: China Daily Mail

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