In what could be an acid test for battery electric vehicles, China has announced that it will end all subsidies on so-called “New Energy Vehicles” by the end of 2022.
Currently, New Energy Vehicles or NEVs which cover hybrids, plug-in hybrids, battery electric vehicles, and hydrogen-powered vehicles, enjoy a hefty government subsidy depending on range. On the average, it amounts to around RMB 18,000 or P 144,500 in additional savings to the consumer.
Without government support, this will mean that EVs will have to compete on level ground with traditional combustion engine vehicles in terms of pricing.
However, the world’s largest EV market (it accounts for about 50 percent of global EV sales), says production has gotten cheap enough to no longer warrant government support.
There were plans to initially cut subsidies by end of 2020, but it was extended due to declining sales brought on by the pandemic.
China aims to have NEVs account for 20 percent of new car sales by 2025.
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