Caixin
Oct 30, 2019 08:49 PM
BUSINESS & TECH

China’s Hydrogen Car Industry Holds Out Hope for Special Treatment

A hydrogen fuel cell vehicle sits on display Friday at an expo in Beijing. Photo: VCG
A hydrogen fuel cell vehicle sits on display Friday at an expo in Beijing. Photo: VCG

Representatives of China’s hydrogen car industry have called on Beijing to clarify whether it will continue to prop up the sector financially as it winds down subsidies for the broader new-energy vehicle (NEV) industry.

Attendees at this month’s UNDP Hydrogen Industry Conference in the southern Chinese city of Foshan said while NEV subsidies are set to be scrapped completely ahead of a 2020 deadline, the future of hydrogen vehicle subsidies remains clouded.

Whether Beijing continues financial support will be crucial to the industry’s expansion and development. China’s Ministry of Finance signaled this month it would scrap subsidies, causing anxiety in the sector, but has yet to make a formal announcement.

The ministry indicated it still planned to scrap all subsidies for hydrogen fuel cell cars by the end of 2020, bringing their treatment into line with other types of NEVs, in an official response (link in Chinese) issued to Chen Hong in his capacity as a deputy to China’s top legislature.

Chen, who is chairman of China’s largest auto group SAIC Motor, a company that has invested heavily in hydrogen vehicles, asked that the government continue subsidizing them at this year’s Two Sessions, the annual spring meetings of China’s top legislative and political advisory bodies.

“Long-running subsidies have made some auto companies reliant on government policies and they thus find it hard to compete in global markets,” the ministry said in its response. “The country’s (hydrogen) fuel cell car industry has not made breakthroughs and has not seen rapid development even with financial support.”

That would mean carmakers miss out on handouts of around 200,000 yuan ($28,220) per passenger vehicle and up to 500,000 yuan for heavy commercial vehicles. Manufacturers also get subsidies from local governments.

China has long planned to phase out all subsidies for NEVs — a category that includes pure electric, hybrid electric and hydrogen cars — by the end of 2020. But in March, the Ministry of Finance edged the door open slightly when it proposed adjusting that plan, saying subsidy policies for fuel cell vehicles would be announced separately. None have been forthcoming.

Analysts said the state has become more cautious about subsidies after a series of scandals involving electric carmakers that scammed their way into gaining government handouts. But the ministry’s response is not the final verdict, and the plan remains unsettled.

Xu Yanhua, deputy secretary general of the China Association of Automobile Manufacturers, a state-backed industry group that sets standards, said the government had already paid a high price to push NEV development, and the generous subsides should not be repeated for hydrogen cars. Instead, the bar for financial support should be raised.

No more than 20,000 hydrogen cars have been sold around the globe, and 4,000 of those have been sold in China.

Hydrogen fuel cell vehicles are expensive, ranging from hundreds of thousands of yuan up to more than a million at the high end. The industry had anticipated continued state financing while the market matured.

Contact reporter Isabelle Li (liyi@caixin.com) and editor Flynn Murphy (flynnmurphy@caixin.com)

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