AAA weekly
2020-08-17
Copyright FOURIN, Inc. 2024
China: NEV subsidy policy extended until the end of 2022, setting a price ceiling and affecting the pricing strategy of high-end models
In April 2020, the Chinese government announced an amendment to the new energy vehicle (NEV) subsidy policy. The subsidy policy from 2009 was planned to be abolished at the end of 2020. Considering the economic impact of the COVID-19 pandemic, however, the government has decided to extend the period until the end of 2022 in order to support the NEV market. The subsidy amount standards for 2020-2022 will be set at 10%, 20%, and 30% reduction from the previous year excluding vehicles for the public sectors.
The technical indicators such as the energy density of battery systems are not subject to change for 2020, but the subsidy requirements for the energy consumption and the electric range have been slightly modified. Also, there will be no major changes from 2021 to 2022. Due to many fire accidents of battery electric vehicles (BEVs), the Chinese government intends to gradually set higher requirements so that automakers can keep up with safety and quality developments along with performance improvement.
China: Revision of Subsidy Policy for NEVs
| Policy Name | Notice on Further Improving the Promotion and Application of Financial Subsidy Policies for NEVs |
|---|---|
| Effective Date | April 23, 2020. *the transitional period is from April 23, 2020 to July 22, 2020 |
| Agencies | Ministry of Finance (MoF), Ministry of Industry and Information Technology (MIIT), Ministry of Science and Technology (MOST), and National Development and Reform Commission (NDRC) |
China: 2020 NEV Subsidy Policy Outline (announced in April 2020)
| Overview | Remarks |
|---|---|
| ・Extend the implementation of the NEV purchase subsidy policy until the end of 2022. ・The amount of subsidy for 2020 to 2022 will be reduced by 10%, 20%, and 30% from the previous year respectively. ・The amount of subsidy for vehicles used by public transportation (city buses), taxis (including ride-sharing), environmental hygiene, logistics delivery, postal services, airports, and government agencies will not be reduced in 2020. In 2021 though, the amount will be decreased by 10% from the previous year, and in 2022 by 20%. ・The subsidy will be provided up to 2 million NEVs per year. | ・Considering the economic impact of the COVID-19 pandemic, the Chinese government has decided to extend the term of the subsidy policy to support the revitalization of the consumer economy and the recovery of corporate production. ・As of the end of 2019, the number of vehicles owned by the public sector is over 10 million, but the electrification ratio remains below 7% (announced by the government). The government has decided not to reduce the 2020 subsidy for the public sector-owned/purchased NEVs in order to increase the ratio. ・In line with other countries, such as the UK, Germany, and the US, China has set the upper limit for subsidies to 2 million BEVs. |
| ・For 2020, technical indicators such as the energy density of the battery system will not be changed. The Chinese government also sets slightly higher requirements for energy consumption and the electric range. There will be no major changes from 2021 to 2022. ・The government will support the development of new business models, such as NEVs with replaceable batteries. | ・In the past, NEV subsidy policies have set unrealistically stricter technical requirements, resulting in quality and safety issues. Thus, the Chinese government has decided to gradually set higher requirements so that manufacturers can improve safety and quality in parallel with improving performance. |
| ・From 2020, the minimum number of NEVs is set per application (passenger NEVs = 10,000 units, and commercial NEVs = 1,000 units). For automakers that have not reached the volume requirement, the subsidy will be provided after the subsidy policy ends. The selling price of passenger NEVs before incentive deduction should be 300,000 CNY or less (however, NEVs with replaceable batteries are not applicable). | ・The government has set an upper limit on the selling price for NEVs in accordance with foreign subsidy policies. - Xpeng P7 (by Xpeng Motors), which was released on April 27, 2020, can be subject to the subsidy if P7 is upgraded with optional equipment (6 grades out of 8 can be purchased less than 300,000 CNY). Initially, all grades of Tesla Model 3 were not subject to the incentive. However, Tesla announced the price reduction for the lowest grade, making it applicable. |
| ・Regarding FCEV purchase subsidies, the government will choose model cities and provide incentives in order to improve FCEV core component technology and promote industrialization (related policies will be announced separately). The government sets a 4-year period and supports the establishment of supply chains and the improvement of technological capabilities during that period. | ・The Chinese government has pointed out that although the injection of social capital into FCEVs has expanded, there are still issues, such as lack of core technology, innovation capacity, and infrastructure. Besides, the government concerns that the subsidy measures for consumers have a limit of promoting industrial system establishment. |
| ・Effective from April 23, 2020 (the transition period is from April 23 to July 22, 2020) - During the transition period, for vehicles that meet the requirements of the 2019 technology indicators but not the 2020 ones, half the 2019 purchase subsidy will be paid. If the 2020 requirements are met, the 2020 subsidy amount will be paid. - The regulation of selling price of less than 300,000 CNY will be starting after the transition period ends. - FCEVs sold from June 26, 2019 to April 22, 2020 will be supported with the transitional subsidy amount stipulated in the 2019 subsidy policy. | ・As with the previous subsidy policies, a transition period of 3 months is set. ・The subsidy amount paid for FCEVs sold from June 26, 2019 to April 22, 2020 was 240,000 CNY for a light truck/small bus and 400,000 CNY for a mid-heavy duty truck/mid-large bus. |
