Changes are underway in China at both a national and local level that will impact the subsidies available to purchasers of new energy vehicles (NEVs) – a term which includes both hybrid and fully electric vehicles. At a national level, subsidies are in decline, with those that remain hoped to encourage production of vehicles with longer driving ranges, higher battery energy density, and lower energy consumption. Since the beginning of 2018, nearly 20 provinces and cities across China have issued new local subsidies. Local subsidies are also in decline, however, to maintain stable development of the NEV industry.
National changes were announced back in February 2018 in a “Notice on Adjusting and Improving the Financial Subsidy Policy for the Promotion and Application of New Energy Vehicles”. New subsidy standards took effect officially on June 12 following a four-month transitional period from February 12 to June 11. NEVs with ranges of less than 150km would no longer be eligible for subsidies. Changes were announced jointly by the Ministry of Finance, the Ministry of Industry and Information Technology, the Ministry of Science and Technology, and the National Development and Reform Commission.
Recent local level changes include the following:
Roskill view: The future competitiveness of NEVs relies on improving factors such as the driving range, charging time and service life. Battery technology is crucial in the NEV industry. All of these ideas are supported by the more recent subsidies which, it is hoped, will result in enterprises developing more advanced technologies, especially regarding battery energy density. Subsidies for NEVs with driving ranges of more than 300km have become more preferential under the new policies, while producers of NEVs with less than 150km driving range have begun to use up their inventories.
The minimum driving range requirement for the national plug-in hybrid electric vehicle (PHEV) subsidy is only 50km, while the requirement for the national BEV subsidy has been raised to 150km. This change is reflected by recent Chinese production and sales statistics. The production of BEVs in June 2018 was 64,000 (falling by 16% from May), while sales were 63,000 (falling by 23%). For PHEVs, June production was 21,000 (an increase of 11%) and sales were 22,000 (an increase of 5%).
These changes show that the Chinese NEV industry intends to shift away from high-speed growth towards slower growth and higher product performance in the long-term.