China's electric car subsidies will not be reduced in 2020

The rapid growth of China’s electric vehicle market slowed last year after the government reduced subsidies for “new energy vehicles” (NEVs). So, China-watchers were overjoyed at the news that there are no major cuts to the subsidies in store for this year. 

Above: A look at the 'Made-in-China' badge on a Tesla Model 3 produced at the Shanghai Gigafactory (Twitter: Ray4Tesla)

Minister of Industry and Information Technology Miao Wei delivered the news to a recent gathering of auto industry execs, and the government-backed Beijing News confirmed that “this year’s NEV subsidy policy will remain relatively stable and there will not be significant cuts.”

China implemented a generous five-year program of NEV subsidies in 2016, but reduced them in 2019, and announced plans to phase them out completely after 2020, citing concerns that some firms have become too dependent on the funds.

Above: Chinese EV subsidies will have an impact on companies like Tesla in the world’s largest automobile market (YouTube: South China Morning Post)

The subsidy cut took a bite out of monthly NEV sales, which dropped for the first time in two years (a slowdown in the overall auto market was also surely a factor). Miao said 1.2 million NEVs were sold in 2019, down from 1.3 million in 2018.

The announcement was music to the ears of automakers. He Xiaopeng, CEO of EV startup XPeng Motors, told Reuters Miao’s speech was “the best news,” and added that policy stability was crucial to the industry.

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This article originally appeared in Charged. Author: Charles Morris. Source: Reuters