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China announces new electric vehicle subsidies - ELECTRIC CHINA WEEKLY No22

03 October 2013

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On 17 September, China renewed subsidies for pure electric cars, plug-in hybrids and fuel cell vehicles. However, whilst providing support for electric cars, the Government’s new policy reduces their overall subsidy levels. A restriction on subsidies for low-speed electric vehicles was removed.
The Chinese Ministry of Finance, the Ministry of Science, the Ministry of Industry and Information, and the National Development and Reform Commission jointly announced the renewal of China’s New Energy Vehicle Subsidies.  
 
Priority given to pure electric cars 
 
The Government subsidies amount to 60,000 RMB (~ 7,212€) for pure electric cars with a range over 250 km (155 miles), and 50,000 RMB (~6,010€) and 35,000 RMB (~4,207€) for EVs with range over 150 km (93 miles) and 80 km (50 miles), respectively. 
 
Under the new subsidy scheme, pure electric and plug-in hybrid electric buses also receive financial support. For buses over 10m in length, EVs will receive 500,000 RMB (~60,096€). Plug-in hybrid electric buses over 10m in length will receive 250,000 RMB (~30,048€). Shorter plug-in hybrid buses do not receive a subsidy. Pure electric buses with a length over 8m and 6m will receive 400,000 (~48,077€) and 300,000 RMB (~36,058 €) respectively. Conventional gasoline-electric hybrid models are not eligible to receive subsidies. 
 
Low-speed electric vehicles benefit from new subsidies 
 
Subsidies for low-speed electric vehicles are also included  in the new policy. The policy is therefore favourable for manufacturers of low-speed electric vehicles like Kandi, Geely, Chery, Shifeng, and Yu Jie Ma in China, the new policy is favourable. Manufacturers of high-performance electric cars like Tesla Motors, on the other hand, will see little benefits from the new subsidies. For makers of plug-in hybrid electric vehicles like BYD, the subsidies are much lower than were expected. 
 
Market feedback on new subsidies
 
Generally speaking, the impact of the new subsidies is likely to be limited. The new subsidies for new energy vehicles will be reduced to 10% below the current levels next year, and 20% below the current levels in 2015. Under the previous subsidy program, China offered up to 60,000 RMB (~ 7,212€) for each electric car and 50,000 RMB (~6,010€) for each hybrid vehicle. Subsidies for buses in the new policy also fell short of the expectations of many industrial stakeholders in China.
 
Industry analysts doubt whether the renewed subsidies will boost the number of electric cars in China. Under the previous more generous subsidy program, total sales of electric vehicles was only 11,375 in 2012, which is far less than the Government’s target: 500,000 electrified vehicles on the road by 2015 and 5 million by 2020. Under the new policy, electric cars will still cost more than gasoline-fueled vehicles. China still faces a battle to get more consumers to embrace electric vehicles.



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