China Plans to remove local subsidies for Electric Cars
China is currently in the process of instructing governments to stop offering subsidies for electric vehicles and other clean energy automobiles. The Ministry of Finance is developing a plan that would mandate authorities to eradicate the incentives, discouraging protectionism, and control overall state expenditure. This plan may be implemented early next year. The government believes the move will improve overall expenditure and at the same time continue to promote the electric vehicle market.
Chinese automakers, however, would still be entitled to central government funds. National grants have allowed electric vehicles to become more affordable and expand the Chinese market to a level higher than the USA. The market now has grown to become the largest, accounting for over half of global electric vehicle usage.
Subsidies have existed within policies for over ten years and have assisted in the development of clean energy vehicles. However, China is now reviewing the current payouts within this industry. The existing program sets funding limits based on vehicle performance.
The central government of China has spent nearly 60 billion yuan in the last year or so on funding for the purchase of clean energy vehicles and is likely to require higher amounts to scale this over the coming years. As part of China’s strategy to improve fiscal stability, the government is scaling back its support for the sector.
Back in 2010, China identified electric vehicles and plug-in hybrids as a prosperous, emerging industry that deserved investment. China intends to end the production and sales of conventionally powered vehicles to tackle emissions and pollution problems in the country.
Experts within the Chinese Association of Automobile Manufacturers believe sales of electric vehicles are likely to expand as much as 50% within the next year.