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China to Consider EV Subsidy Extension in 2023 as Economy Experiences Sharp Downturn

At the beginning of the year, China’s finance ministry said it would cut subsidies on new-energy vehicles (NEVs), including EVs, by up to 30% but withdraw them at the end of the year. This was after a two-year extension that started in 2020. On Wednesday, sources familiar with the matter said the Asian giant is currently in talks with automakers about possibly extending the subsidies in 2023, Reuters reported.
Tesla Village in China 13 photos
China may reach 20% of NEVs sales in 2022, which explains why it will cut EV subsidies in 2023.China may reach 20% of NEVs sales in 2022, which explains why it will cut EV subsidies in 2023.China may reach 20% of NEVs sales in 2022, which explains why it will cut EV subsidies in 2023.Wuling Hongguang Mini EVWuling Hongguang Mini EVWuling Motors EVWuling Motors EVWuling Motors EVNancy Pelosi Visits Chinese EV ManufacturerBYD FactoryChinese Car Company BadgesWuling Hongguang Mini EV Manufacturing
China is the world’s leading automotive market. And as the market shifts from ICEs to EVs, the Asian country is looking to establish itself as a global leader in the electric vehicle industry.

Initially, China wanted to abolish subsidies on NEVs by 2020, but the global pandemic hit and prompted a delay. In April of the same year, the Chinese government said NEV subsidies would be cut by 10% in 2020, 20% in the following year, and 30% in 2022.

The change of course by Chinese policymakers comes when the nation’s economy has slowed sharply, and together with it, the automotive industry. Part of the reason is the harsh COVID restriction imposed in March in key cities, including Shanghai. The restrictions have affected all sectors of the economy, shutting down stores, affecting the supply chain, and drastically slashing spending.

Sources close to the Ministry of Information and Industrial Technology (MIIT) told Reuters they are considering extending subsidies to EV buyers in 2023.

The Chinese government introduced NEV subsidies in 2009. According to Global Fleet, the incentive cost the central government more than 200 billion Yuan ($29.6 bn), with local governments spending another 100 billion ($14.8 bn) totaling 300 billion yuan ($44 billion).

The incentives have positively affected the local industry, with the sales of NEVs rising from 500 units in 2009 to almost 1.2 million in 2019.

In 2021, Chinese companies sold 3.3 million units in China, up from 1.3 billion in 2020. According to Fortune, global EV sales increased by 69% in the first 11 months of 2021, with the Asian giant leading the growth.


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