China to scrap EV subsidies

China to scrap EV subsidies

Strong sales growth means state aid is no longer needed, say authorities

A charging station is seen at a Beijing showroom for Nio Chinese-made electric cars. (Reuters File Photo)
A charging station is seen at a Beijing showroom for Nio Chinese-made electric cars. (Reuters File Photo)

BEIJING: China will end subsidies for electric and hybrid cars at the end of the year, authorities have announced, saying the strength of sales in the sector meant state support was no longer needed.

In a statement published on Friday, the Ministry of Finance said purchase subsidies would be reduced by 30% from the beginning of 2022 before being scrapped completely by the end of the year.

“Given the growth of the industry for vehicles with new energy, the sales trends and the smooth transition of manufacturers, the subsidies … will end on Dec 31,” the ministry said.

“Vehicles registered after Dec 31, 2022 will not be subsidised.”

Sales of electric and hybrid cars have boomed in China, with increases of more than 100% year-on-year in recent months.

So-called new-energy vehicles are set to represent 18% of all vehicle sales in 2022, the China Association of Automobile Manufacturers (CAAM) estimated last week. In 2019, they accounted for only 5%.

Of the 27.5 million vehicles forecast to be sold this year, according to CAAM, 5 million will be electric and hybrids.

The association estimated overall growth in the world’s largest vehicle market in 2021 was 3.1% — the first year of sales growth since 2018.

China, the world’s largest polluter, has set ambitious goals for the widespread adoption of electric and hybrid vehicles, and aims to have the majority of cars powered with clean energy by 2035.

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