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China to Cut Subsidies on New-Energy Vehicles (EVs) 10%


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BEIJING April 23, 2020; Reuters reported that China will cut subsidies on new energy vehicles such as electric cars by 10 percent this year, the finance ministry said Thursday, following a decision last month to continue providing incentives to buy cleaner light vehicles.

The government had announced plans in 2015 to end the subsidies this year, but said in March it would extend them.

China has set a target for NEVs, which include plug-in hybrids and hydrogen fuel cell vehicles, to account for a fifth of auto sales by 2025, compared with 5 percent currently, as it seeks to cut pollution and cultivate the domestic auto industry.

Under the new plan, China will extend subsidies on NEVs to 2022, and exempt sales taxes for two years.

However, the subsidies will apply only to passenger cars costing less than 300,000 yuan ($42,376). That is likely to exclude premium electric vehicles such as those built by Germany's BMW and Daimler.

Tesla Inc.'s China-made Model 3 sedans, meanwhile, are currently priced at 323,800 yuan before subsidies, meaning the U.S. EV maker will have to reduce prices to qualify for the incentives.

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