Guide to Buying EV
China's EV Policy
China's EV Policy
China’s extensive policies targeting the EV industry have been key to driving global demand and market penetration.china ev policy These include monetary and non-monetary subsidies, tax exemptions, infrastructure support and fleet procurement. They are part of a bigger policy framework that aims to transform the country’s transport system and lower carbon emissions.
Historically, carbon emissions from transport have accounted for the largest share of total China’s CO2 emissions.china ev policy Hence, it is imperative that road transport shifts to EVs take place as quickly as possible. This requires both a high rate of EV adoption by the domestic consumer and a fast substitution of existing internal combustion engine (ICE) vehicles with EVs on the existing market. This is a huge challenge and the main reason why China launched such a comprehensive policy package in the past 15 years.
The government has encouraged innovation and accelerated mass production of EVs by funding research and development, providing financial subsidies and tax breaks, supporting infrastructure and transforming public transportation.china ev policy The policy has resulted in a high-end, long-lasting EV industry in the country and has helped reduce its dependence on car imports. It has also created a new export industry.
In a way, China’s efforts to develop its EV industry are not unlike its successful effort in building its solar energy industry, which is now the world leader.china ev policy The two industries are comparable in that both are essentially high-tech industries that depend heavily on the state for financing, technology transfer and infrastructure development.
The subsidy extension is likely to reduce front-loaded purchases in 4Q23, but should be offset by stronger EV sales amid more aggressive pricing strategies.china ev policy Clearer clarity on the phasing-out of long-term purchase taxes should increase EV profitability beyond 2023, which will give manufacturers more room to maintain competitive prices and push for higher market shares.
Currently, car buyers in the country can receive a 3,000 yuan ($450) subsidy for buying a new battery electric vehicle or PHEV.china ev policy As the subsidy will be phased out, it is important for the Chinese EV market to reach full price parity with petrol and diesel cars. This will help to ensure that EVs are affordable and accessible for all consumers.
While the 13-year-long subsidy programme will end at the end of this year, the industry has already begun to prepare for the withdrawal of the incentives.china ev policy The purchase subsidies were extended until 2020 for new BEVs and PHEVs, but the subsidy coverage will gradually be reduced in the following years to encourage a smooth transition to fully electrified vehicles. To further promote the growth of the EV industry, the government will continue to provide infrastructure support and promote new energy charging stations. Besides these, it will promote the transformation of public transport systems to make them more efficient and environmentally friendly. The policy will also help to attract more private investment and international companies into the EV sector. As a result, it is expected that the EV industry will continue to grow in the years to come.
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