Shanghai — China is in talks with automakers about extending high-value subsidies for electric vehicles (EVs) that expire in 2022, aiming to sustain growth in key markets as the economy slows. Three people familiar with this issue said.
Policymakers’ move is due to a sharp slowdown in the world’s second-largest economy, accompanied by a slowdown in car sales, after a Shanghai-led city imposed a severe COVID-19 blockade from March. Thing. Curbs closed stores, disrupted supply chains, and reduced spending, including new homes.
Government departments, including the Ministry of Information Industry and Technology (MIIT), are considering continuing subsidies to EV buyers in 2023, people who were not named because the discussion was private, said. ..
China’s high-value incentive programs are valued for creating the world’s largest EV market. China Merchants Bank International car analyst ShiJi estimates that approximately 100 billion yuan ($ 14.8 billion) has been distributed to buyers, including commercial fleet operators, by the end of 2021 since the subsidy began in 2009. rice field.
Those who know the issue said that all the terms of the 2023 extension, such as the amount of the subsidy and which vehicles are eligible for the subsidy, have not yet been finalized.
Two people told Reuters that one particular measure under consideration would roll back a planned purchase tax increase for eligible electric vehicles and partially electric vehicles.
There is no purchase tax for such a car this year, but the government planned to raise it to 10% of the purchase price in 2023. Instead, they said the tax rate would be raised to 5%.
The subsidy was made by all car makers, including non-Chinese players like EV giant Tesla O>, the only foreign car maker with a factory in Shanghai and the best-selling EV. Available for cars.
On Wednesday, MIIT and the Treasury did not immediately respond to requests for comment.
The EV subsidy system was originally planned to be phased out by the end of 2020, but Beijing has extended it for two years to stimulate demand following the COVID pandemic.
The government has also reduced the amount of subsidies per vehicle over the years as demand has skyrocketed and manufacturing costs have fallen. For example, subsidies for plug-in hybrid vehicles over 300 km are reduced by about 20%, worth about $ 1,900.
$ 4,000 EVS
An incentive program to buy what China calls a new energy vehicle (NEV) has raised the threshold for subsidized vehicles over the years, especially stimulating the purchase of long driving ranges. Did.
In the highly developed Chinese EV market, small battery-powered urban vehicles, mostly unsubsidized, account for 40% of EV sales, averaging just under $ 4,000, according to auto consultant JATO. This is compared to more than $ 26,000 in the US for comparable models.
The subsidy is currently targeted at larger models with a mileage of over 300 kilometers on a single charge and a price of less than 300,000 yuan ($ 44,459).
According to data from the China Automobile Manufacturers Association (CAAM), NEV sales in China increased 45% year-on-year to 299,000 units in April, with approximately 1.18 million units sold across the automotive sector. However, the surge was at a much slower pace than last month’s growth, when sales more than doubled from the previous year.
The association predicts that production and demand will begin to catch up within a few weeks of the April valley, which was triggered when dozens of cities in China were in a complete or partial blockade of COVID.
CAAM urged the government to consider additional support for the industry. Overall car sales in April were down almost 48% year-on-year, according to industry group data.
In April, some local governments, including Guangdong Province and Chongqing City, also developed stimulus measures to subsidize consumers to replace old combustion engine vehicles with new EVs.
In another move, the China Securities Journal, a state-run newspaper, reported on Tuesday that authorities would introduce subsidies from June to encourage more local buyers to buy cars containing NEV.
Municipalities in Shanghai are also looking at how they can start spending after a major cleanup of car sales at China’s commercial and financial hubs in April. No new cars were sold in a city of 25 million people during the severe blockade last month, according to the Shanghai Automobile Association.
($ 1 = 6.7478 Chinese RMB) (Report by Zhang Yan and Norihiko Shirozu, edited by Kenneth Maxwell)
China is discussing extension of EV subsidy with automakers-source
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