China Drastically Cuts Subsidies for EVs and Other Low-Emission Vehicles

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China is set to continue the process of cutting subsidies for “new energy vehicles.” In other words, those subsidies refer to EVs, but also for all alternatively powered vehicles sold in the world’s biggest vehicle market, including hybrids. It is no surprise that China is doing this, as the country’s Finance Ministry announced it would do in the spring of 2020. The plan was to do a gradual cut of subsidies until these were eliminated altogether. After the end of 2022, China will no longer offer state subsidies for “new energy vehicles.” There is no word if other incentives will be introduced. By 2025, China wants new energy vehicles to represent at least twenty percent of all automobile sales in the country. As Reuters noted, sales of NEVs in the country have grown to an estimated five million units throughout 2021, which would mean a 47 percent increase over 2020. In 2022, the value of the subsidy offered by the Chinese government would be cut by 30 percent, but it would end up at zero by the end of the year. Until the latter happens, many customers might be tempted to attempt to get a new vehicle and benefit from the subsidy as long as it is still available. In a way, the move made by Chinese authorities has the potential of being replicated in other countries. After all, if the current trend from Europe is set to influence other markets, there would be no point in offering a subsidy for purchasing electric vehicles if all new vehicles offered on the market were electric. China has numerous electric vehicle manufacturers, so the change might dwindle sales in the first few months after the subsidies will be eliminated. Nio, one of the best known brands from China, has offered a special deal for customers of some of its models, like the ES6, EC6, and ES8. Those who paid a deposit for one of those models by the end of 2021 would get a discount that would compensate for the reduction of the state-sponsored subsidy.