Jan 05, 2021 05:56 PM

China Slashes New-Energy Car Subsidies 20% as Sales Rebound

(Nikkei Asia) — China is reducing subsidies for new-energy vehicles by 20% in 2021 following a solid recovery in sales, moving to pull back fiscal support designed for a pandemic-battered market.

The new policy for the program, covering electric cars, plug-in hybrids and fuel cell automobiles, took effect Friday. The subsidies are reduced by a smaller 10% for commercial vehicles including buses, taxis, ride-sharing vehicles and waste collection trucks.

Sales subsidies for standard electric vehicles with a travel range of 300 kilometers to 400 kilometers per charge decline to 13,000 yuan ($2,012) in 2021 from 16,200 yuan in 2020. Buyers of standard plug-in hybrids get 6,800 yuan instead of 8,500 yuan.

Beijing announced a two-year extension to the subsidy program last March after sales of new-energy vehicles recorded their first year-on-year drop in 2019, a slump deepened by the coronavirus. But sales apparently ended up exceeding year-earlier levels by nearly 10% in 2020, prompting the government to curb support and lighten its fiscal burden.

The China Association of Automobile Manufacturers estimates sales of new-energy vehicles at 1.3 million units for 2020 and forecasts that they will reach 1.8 million units in 2021.

New-energy vehicles made up about 5% of China’s new-auto sales in 2020. The China Society of Automotive Engineers’ road map puts forth targets of 20% in 2025 and 50% in 2035, when the other half are to be conventional hybrids.

This article was originally published by Nikkei Asia

Contact editor Yang Ge (

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