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Chinese Electric Vehicle Subsidy Changes In 2018 — The Details

New Standards

We got news on China’s electric vehicle subsidies for 2018. Major changes lie ahead. Firstly, the new subsidy policy is designed to encourage higher range and lower energy consumption in electric vehicles, while removing and decreasing subsidies to lower ranged models. Additionally, a key policy change is that regional subsidies are coming to an end in China.

The Rules

The 2018 subsidy scheme is in line with the end goal of withdrawing subsidies and pushing automakers to make better electric vehicles.

Firstly, vehicles with driving range below 150 km will not receive subsidies, vehicles with 300 km of driving range will get the current electric vehicle subsidies, and ranges over 400 km have higher subsidies. This is to encourage automakers to produce longer range vehicles.

Secondly, battery power/weight requirements have been increased, increased from 90 wh/kg to 105 wh/kg. They also only apply the full subsidy for vehicles with 140 wh/kg batteries, again pushing for better electric vehicles.

Thirdly, power consumption requirements have been increased, pushing for more efficient vehicles, which fit into the government policy to push the development of better electric vehicles and the underlying technology.

In 2016, China outlined that its subsidies for new energy vehicles will end by 2020 and that they will drop 20% each year until 2019, when they will decrease 40% based on 2016 levels, which will then completely end the subsidies.

Electric vehicle subsidies impact all areas of transport in China. They have had a massive impact on the tremendous growth of China’s electric bus market, as can be seen here, in our 2017 Chinese electric bus news roundup.

Dual-credit policy implements on Apr. 1, 2018

The dual-credit policy for passenger vehicle companies went into force on Apr. 1. The scheme targets automakers who produce more than 30,000 vehicles annually. Automakers who sell passenger vehicles (including the imported passenger vehicles) in China will be examined in terms of average fuel consumption credits and new energy vehicle credits. Automakers who fail to achieve the required credits will be fined.

As stipulated in the policy, automakers should produce proportional NEVs in accordance with the sale volume of fuel-powered vehicles they produced. The policy will compel most automakers to manufacture NEVs. The dual-credit policy is much relevant to the fuel consumption. That means the longer the range is and the lower the fuel consumption is, the higher the credits are. 

Currently, China-branded NEVs take up more than 90% of the Chinese NEV market. To meet the requirements of the dual-credit policy, some foreign-funded automakers started to establish JVs to counter the challenges from their competitors, such as Daimler and BAIC BJEV, Renault-Nissan Alliance and Dongfeng, Ford and Zotye, BMW and GWM. Forced strongly by dual-credit policy and with the increasingly relaxing governmental surveillance on NEV investments, more similar JVs and M&A may take place.

Regarding the impact of the policy to customers, the implementation of the dual-credit policy will encourage automakers to produce more NEVs and NEVs will see improvement in quality and reduction in prices. This will benefit the customers a lot.