Report: Chinese EV Subsidies May Be Coming Back

Matt Posky
by Matt Posky
report chinese ev subsidies may be coming back

It could be argued that a large portion of the Chinese economy has been propped up by government programs, with electric vehicles making one of the best examples. With a vested interest in battery technology, China did everything it could to encourage industry players to focus on EVs while subsidizing their purchase by consumers. The end result was a country with the highest number of alternative-energy vehicles in the world — and more automotive automotive startups than it knew what to do with.

While the plan was always to force accelerated competition by getting new manufacturing firms to duke it out for supremacy, EV sales were also supposed to remain sky high. Yet they didn’t. China’s auto market began running out of steam far earlier than everyone assumed. When the country nixed electric-vehicle subsidies over the summer, the segment went into a tailspin, with every successive month returning negative growth.

China would like to see things turn around, so it’s mulling the prospect of reintroducing incentives to get EVs into more driveways.

According to Bloomberg, the plan had been under consideration long before the coronavirus outbreak threw the country into chaos.

The outbreak only strengthens the case to re-subsidize, as it’s also suppressing vehicle production and sales. It’s hardly surprising that few want to risk exposure so they can get out there and purchase or build a new automobile to support China’s ailing economy. However, once the bigger fish are fried, China would like to make new vehicle purchases as appetizing as possible.

From Bloomberg:

Talks are at a preliminary stage and there is no guarantee the subsidies will be extended, the people said. As things stand, they are still set to be phased out at the end of 2020.

Prolonging the handouts would be beneficial to local EV makers such as BYD Co., BAIC BluePark New Energy Technology Co. and NIO Inc. as well as the likes of Tesla Inc., which last month started deliveries from its new Shanghai factory, its first outside the U.S.

Sales of new energy vehicles including electric cars, plug-in hybrids and fuel-cell cars tumbled 54 percent in January from a year earlier and the wider auto market also shrank, according to China Association of Automobile Manufacturers. Those figures were largely before the coronavirus outbreak took hold and led to citywide lockdowns and production halts.

While there’s no confirmation from Chinese officials, the Ministry of Industry and Information Technology has already indicated it wants to reevaluate China’s existing policies. A number of rules surround EVs, some of which added to customer confusion as several municipalities issued certain regulatory mandates a year early when incentives were first being stomped out. Automakers operating within the country are also required to manufacture electric models specifically intended for the Chinese market. With fewer people buying them, that’s also looking like a loser.

The PRC will undoubtedly have to do something, and reconfiguring all regulations relating to zero-emission vehicles sounds rather involved. Offering customers some cash back on EVs while the industry attempts to normalize them seems a lot easier.

[Image: Xujun/Shutterstock]

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  • SCE to AUX SCE to AUX on Feb 20, 2020

    Interesting story, but anything with China and "market" in it is automatically distorted by their government policies, and doubly when we're talking EVs. Oh wait, that's the same everywhere.

    • See 2 previous
    • TMA1 TMA1 on Feb 20, 2020

      Speaking of distortion and mandates, I know I've mentioned this before, but it bears repeating. In China, you have to get a license plate before you can go down to the dealership to buy a car. In several major cities, like Beijing and Shanghai, you can get a green plate (for an EV) today, and go buy your ride. But a blue plate (gas/diesel) can take, literally, years of waiting. So depending on where you live, if you want to drive today (or this year), you're buying electric. EVs probably make more sense. As far as I can tell, people in China do not drive across the country the way people do in the US. They have a much more advanced rail system that makes long distance travel easier.

  • Thornmark Thornmark on Feb 20, 2020

    has anyone figured out where all the raw materials for these ultimately consumable batteries will come from? seems there's an assumption that prices will fall but what happens to BEVs if battery prices go up due to supply and demand?

  • Nrd515 I bought an '88 S10 Blazer with the 4.3. We had it 4 years and put just about 48K on it with a bunch of trips to Nebraska and S. Dakota to see relatives. It had a couple of minor issues when new, a piece of trim fell off the first day, and it had a seriously big oil leak soon after we got it. The amazinly tiny starter failed at about 40K, it was fixed under some sort of secret warranty and we got a new Silverado as a loaner. Other than that, and a couple of tires that blew when I ran over some junk on the road, it was a rock. I hated the dash instrumentation, and being built like a gorilla, it was about an inch and a half too narrow for my giant shoulders, but it drove fine, and was my second most trouble free vehicle ever, only beaten by my '82 K5 Blazer, which had zero issues for nearly 50K miles. We sold the S10 to a friend, who had it over 20 years and over 400,000 miles on the original short block! It had a couple of transmissions, a couple of valve jobs, a rear end rebuild at 300K, was stolen and vandalized twice, cut open like a tin can when a diabetic truck driver passed out(We were all impressed at the lack of rust inside the rear quarters at almost 10 years old, and it just went on and on. Ziebart did a good job on that Blazer. All three of his sons learned to drive in it, and it was only sent to the boneyard when the area above the windshield had rusted to the point it was like taking a shower when it rained. He now has a Jeep that he's put a ton of money into. He says he misses the S10's reliablity a lot these days, the Jeep is in the shop a lot.
  • Jeff S Most densely populated areas have emission testing and removing catalytic converters and altering pollution devices will cause your vehicle to fail emission testing which could effect renewing license plates. In less populated areas where emission testing is not done there would probably not be any legal consequences and the converter could either be removed or gutted both without having to buy specific parts for bypassing emissions. Tampering with emission systems would make it harder to resell a vehicle but if you plan on keeping the vehicle and literally running it till the wheels fall off there is not much that can be done if there is no emission testing. I did have a cat removed on a car long before mandatory emission testing and it did get better mpgs and it ran better. Also had a cat gutted on my S-10 which was close to 20 years old which increased performance and efficiency but that was in a state that did not require emission testing just that reformulated gas be sold during the Summer months. I would probably not do it again because after market converters are not that expensive on older S-10s compared to many of the newer vehicles. On newer vehicles it can effect other systems that are related to the operating and the running of the vehicle. A little harder to defeat pollution devices on newer vehicles with all the systems run by microprocessors but if someone wants to do it they can. This law could be addressing the modified diesels that are made into coal rollers just as much as the gasoline powered vehicles with cats. You probably will still be able to buy equipment that would modify the performance of a vehicles as long as the emission equipment is not altered.
  • ToolGuy I wonder if Vin Diesel requires DEF.(Does he have issues with Sulfur in concentrations above 15ppm?)
  • ToolGuy Presented for discussion:
  • Kevin Ford can do what it's always done. Offer buyouts to retirement age employees, and transfers to operating facilities to those who aren't retirement age. Plus, the transition to electric isn't going to be a finger snap one time event. It's going to occur over a few model years. What's a more interesting question is: Where will today's youth find jobs in the auto industry given the lower employment levels?