China Cuts E-vehicle Subsidies

The e-vehicle industry will certainly be hit hard by the latest decision of the Chinese government to cut subsidies for the purchase of electric vehicles by more than half...

The e-vehicle industry will certainly be hit hard by the latest decision of the Chinese government to cut subsidies for the purchase of electric vehicles by more than half. As of June, the Chinese state subsidy for an electric car — now worth $9,830 — will be cut to around $4,100. To qualify for any subsidy at all an electric vehicle must now have a specified range of at least 250 miles. Over the next three months they will also abolish local government subsidies and channel these funds into improving the country's charge-station infrastructure.

China raises the bar for subsidies

China's electric car market accounts for a good half of the world market, so the subsidy cut for the production of electric cars will have an impact worldwide. Many foreign car manufacturers such as Ford, GM, Mercedes, Audi, Nissan, Peugeot, Jaguar, Hyundai and Mazda have production agreements in China, which will then be significantly less attractive.

The overall strategy is to encourage innovation in China’s car manufacturing industry and develop improved technology to keep its products competitive. The statement from China’s Ministry of Finance lists a number of goals to promote the production of higher-quality vehicles with longer range. The Chinese electric vehicle company BYD has also announced it will be investing around $1.5 billion in a new battery giga-factory able to produce 20 GWh of battery cells per annum to power its range of electric vehicles.

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Discussion (2 comments)

FabulousMuller 5 years ago

That's the China Model of doing business , first came here and teach me how to do it , later : ok good-bye we don't need you anymore now "People of China" will produce the same technology from what we learn (stolen?) from you. One day all these companies will regreat a lot of this.

Walter Mayer 5 years ago

Thats the western world model of doing business. Look where you can get the lowest wages, even if the wages are only 1% of production cost (see Siemens mobile movement of production from Germany to Romania). Western manager tell you from morning to evening, that workers are the highest value of the company. But if they find a region where the wages a little lower, they say good-bye we don't need you anymore now - workers in other countries do it for lower wages. This game is played again and again. But workers have the knowledge. And if production is moved to low wage country, the knowledge move also. And when manager of western companies recognize, that the hole business is taken over they blame eastern countries of stolen knowledge.
This happens in the 70s/80s with Japan. This happens in the 90s/early 2000 with Russia and Eastern Europe contries, and last 15 years with China.
That low cost production is not possible in high wage countries is only the wrong mindset of the western companies managers. During the 70s/80s the "Schneider" company became famous with low cost audio, TV and computer products made in Germany. But wenn the successful boss of the company died and was replaced by a normal "western" thinking manager, the company goes down.
The difference between western and eastern manager is, western manager think about maximized profit today, eastern manager think about long term success.