China to cut new-energy vehicles incentives after 2020 image

The Chinese government plans to gradually reduce the financial aid for new-energy vehicles by 2020 and entirely stop the incentive program from then on.

The automakers are relying on subsidies granted from governments for keeping the customers’ interest as high as possible towards electric vehicles. But it seems that the Chinese automobile companies are overly reliant on such financial assistance, prompting the government to come up with another plan to encourage production and use of new-energy vehicles, considering a points-based system similar to that used in California, Finance Minister Lou Jiwei said at a conference in Beijing on Saturday. Therefore, the strategy is to gradually reduce the amount of subsidies. The government will cut in 2017-2018 subsidies by 20 percent from those granted in 2016, and in 2019-2020 subsidies will be 40 percent less than this year, Lou said.

The electric cars expansion is a vital step in China’s plans to reduce the emissions levels and dependency on imported oil and also to upgrade the auto industry. The sales of electric cars are well behind government targets despite financial help granted to automakers and consumers as well, a major issue in this regard being a not very developed network of charging stations. The government said last year that it would speed up the building of recharging facilities for electric cars, wanting to reach five million stations for plug-in vehicles by 2020.

Buyers of electric cars receive at present as much as 55,000 yuan (around 8,400 dollars) in central government subsidies, depending on the vehicle’s range with a single charge. Owners of “green” cars, including hybrids and plug-in hybrids, are also helped by being exempted from registration and usage restrictions. Despite these incentives, China reported sales of only 331,092 units of such vehicles last year.

Via Bloomberg