China may extend its electric vehicle subsidies as it deals with a slow-down in new car sales and the economy as a whole.
The country’s long-standing EV subsidies were set to expire this year but individuals with knowledge on the matter state that government departments, including the Ministry of Information and Industrial Technology, are considering a continuation of subsidies through 2023.
Details about the possible extension are limited, meaning it is not yet known how generous they will be nor which vehicles will qualify for them. One measure thought to be on the cards is for the government to decrease a planned 10 per cent purchase tax for qualified full-electric and electrified vehicles down to 5 per cent.
China had originally intended on phasing out its EV subsidy scheme by the end of 2020 but it was extended due to the COVID-19 pandemic. Reuters notes that more than 100 billion yuan ($14.8 billion) in subsidies have been provided to buyers of New Energy Vehicles in China since 2009.
Data from the China Association of Automotive Manufacturers (CAAM) reveals that sales of New Energy Vehicles rose by 45 per cent year-on-year in April to 299,000 but that the rate of growth was slower in March due to many Chinese cities being in COVID-19 lockdowns through April. Overall sales across China last month were down almost 48 per cent from April 2021, promoting CAAM to urge the government to consider providing additional help for the industry.
In addition to keeping existing EV subsidies for longer than initially planned, it is understood that China may introduce subsidies that will encourage rural buyers to purchase NEVs by providing them with payouts of up to 5,000 yuan ($740).