China will sharply cut subsidies for new-energy buses for public transportation in a prelude to a possible removal of subsidies next year, according to a circular issued Wednesday by four central government ministries.

The new policy on new-energy buses follows a March decision to cut subsidies for other new-energy vehicles by 50% as regulators move to scrap the years-long incentive policies that fueled China’s electric-vehicle boom but is also blamed for distorting the market. The March policy didn’t mention how subsidies for public transportation buses would be affected, sparking speculation that the sector may face smaller cuts. But the latest circular indicates that policymakers will make no exception.

Nearly 80% of China’s new-energy coaches are used for urban public transportation. A 2018 plan issued by the State Council set a target that all major cities’ public transportation system would be operated by new-energy buses by 2020.

Official data showed that since 2015, China’s annual purchases of buses has remained between 90,000 and 100,000 units.

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