China Cuts Electric Car Subsidies

March 28,2019

China is scaling back subsidies on EV from government to encourage local manufacturers to rely on innovation instead of government assistance as it realises that its EV industry has reached a matured state. The rollback of subsidies has been far more than market expectations and has led to drop in share of country’s top EV makers. As per the new directives the subsidy for pure battery electric cars with driving ranges of 400 km & above will be cut by half, to 25,000 yuan ($3,700) per vehicle from 50,000 yuan. To qualify for any subsidy, electric cars need to have a range of at least 250 km. This doesn’t come as a surprise to EV makers as the Chinese government had warned of its plans to scale back subsidies and phase them out completely after 2020, though it hadn’t given details. This was being done to promote development of new technologies and better vehicle as the growth in EV industry of China was mainly coming through financial support with no progress on technology upgradation. This cut in subsidy has led to decline in share price of major companies like Blue Park New Energy Technology (-3.5%), NIO Inc (-5.4%) and BYD Co., the country’s top seller of new energy vehicles, dropped as much as 4.2 per cent in Hong Kong. The Chinese finance ministry also urged local governments in China to remove subsidies on purchases of electric vehicles, including buses and trucks, after a three-month grace period starting Tuesday. Subsidies have been key to making plug-in hybrids and EVs of companies such as BYD, which is backed by Warren Buffett, more affordable to Chinese consumers and helping the country surpass the US as the world’s biggest market for such vehicles in 2015. On top of what the central government spends, Chinese cities and provinces separately offer incentives to make electric cars more appealing in a country where automakers from Volkswagen AG to Ford Motor Co. are planning to increase EV offerings. #autojobs4u #automotivejobs #jobs

Autojobs4ublog Team