Bloomberg: China considers further cuts in subsidies for electric vehicle purchases

China is considering further cuts in subsidies for electric vehicle  purchases, foreign media said today, citing multiple people familiar with the matter. This could be another blow to the once-booming electric industry, which is now in the doldrums. China’s electric car industry regulators have been discussing the proposal, but will not make a decision until they weigh sales data in the coming months, these people said.

The plan includes cuts next year, but discussions are still in its early stages and there is no guarantee it will be implemented, two people familiar with the matter said.


China has been subsidizing the purchase of electric vehicles since 2009 to boost the industry. In the past few years, China has begun to gradually reduce subsidies to allow carmakers to compete on their own. But the problem is that the last time the government cut subsidies triggered the first drop in sales of electric cars in China on record.

China is the world’s largest car market, accounting for about half of global sales of electric vehicles. As a result, the downturn in China’s electric vehicle market has also affected the global electric vehicle industry. China sees electric cars as a strategically important industry and plans to reach its target of 60 per cent of domestic sales by 2035, according to people familiar with the matter.

In fact, China announced four years ago that it would phase out subsidies for new energy vehicles after 2020, even though they played a crucial role in consumers’ decision to buy electric cars. Even so, analysts at Sanford C. Bernstein, a research firm, say the cuts won’t stop automakers from growing, but rather  good for long-term demand for electric vehicles.

Tesla’s multibillion-dollar auto plant in Shanghai is finishing and preparing to start production in China later this year. In addition, global heavyweight carmakers such as Daimler and BMW are planning to introduce new electric vehicle models.

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