The government of the world’s largest auto market announced it would move to lower the subsidies of new-energy vehicles in the country, even as deliveries have not met the official forecast.
The Chinese will curb the subsidies more than previously announced on new-energy vehicles, the country’s term for vehicles including plug-in hybrids, battery and fuel cell electrics. According to a recent statement posted on the finance ministry’s website, the officials will curb the incentives on new-energy models by 40 percent for the 2019 to 2020 period from the level mulled for 2016. The new figure is two times larger than the ministry envisioned back in December 2014. That could heavily impact the automakers, as most of them have been hard at work unveiling new energy vehicles, enticed by the financial support and the fact they could skip costly registration fees or even restrictions. Analysts also consider the move to spark increased research and development in the field, as the carmakers would rush to introduce new technologies aimed at making hybrid and electric cars even cheaper than today – thus offsetting the lower government subsidies.
Chinese automakers and their foreign rivals have been battling for a slice of the world’s biggest auto market, even as forecasts this year put the economic growth on par with its 1990 level. The Chinese customers, facing increasingly more restrictions to register cars as the authorities fight to curb pollution and traffic jams, have been turning their attention to sport utility vehicles and minivans, which can offer more room than passenger cars.