China to Focus More on Promoting New Energy Vehicles from Providing Incentives to Carmakers

China to Focus More on Promoting New Energy Vehicles from Providing Incentives to CarmakersChina switches its focus in promoting new energy vehicles from providing incentives to electric carmakers and buyers when giving out subsidies for the construction and maintenance of charging facilities. Just last week a plan was drafted that was intended to stimulate the extension of electric car charging facilities across the country for the next five years was released for public opinion by government departments including the Ministry of Science and Technology and the Ministry of Finance.

The drafted plan makes the local government eligible for up to 200 million yuan in annual rewards from the central government. The draft plan also included provinces and cities are able to receive rewards from top authorities wherein the higher the new energy vehicle sales figures the bigger the rewards. In 2016, areas that meet the minimum requirement of selling more than 30,000 new energy vehicles gets 9,000 yuan for each vehicle sold. Furthermore the central government provides a special bonus of 7.5 million yuan for every 2,500 units of additional sales with a reward ceiling of 120 million yuan. The minimum requirements and incentive ceiling will increase annually.

In 2020, the minimum sales requirement will be at 70,000 units and areas that qualify will get subsidies of 12,600 yuan for each sale. The bonus rule changes to 11 million yuan for every 6,000 units of increased sales and bonus ceiling is at 200 million yuan. the draft plan also calls for all local government to create plans to promote new energy vehicles and charging infrastructure operations and report these plans to drafters by March of next year. The drafted plan states that the reward money will be used in areas related to charging facilities such as operations, upgrades and construction of facilities. The money received will not go to subsidies for purchasing new energy vehicles or operating an electric car business that are the current destination of most incentives.

Buyers of new energy vehicles are attracted by easy to get car registration, big subsidies, and fuel efficiency and tax reductions so the price of new energy vehicles should drop from its current levels to be competitive after the subsidies end. Earlier the Ministry of Finance released a notice that its financial support policy for new energy vehicles from 2016 to 2020 that indicates the incentives for 2017 and 2018 is at 20 percent lower that in 2016 and 40 percent lower in 2019 and 2020.

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