1/27/2016

China to Phase Out Subsidies for New-Energy Vehicles

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China's finance minister says the country will phase out government incentives for electric and other new-energy vehicles after 2020 but increase spending on grants and infrastructure improvements.

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China's finance minister says the country will phase out government incentives for electric and other new-energy vehicles after 2020 but increase spending on grants and infrastructure improvements.

Buyers currently receive as much as 55,000 yuan ($8,400) when they buy an electric vehicle. The central government plans to reduce such support by 20% from this year's level in 2017-2018. The payouts will drop to 40% of current levels in 2019-2020 and disappear in 2021, Bloomberg News reports.

Replacing the consumer push will be a points-based system for manufacturers to encourage greater output of EVs and other new-energy vehicles. Bloomberg likens the scheme to a California program intended to achieve similar results.

China spent some 37 billion yuan ($5.6 billion) over the past five years promoting new-energy vehicles, analysts tell Bloomberg. They estimate the country will hike its spending to 63 billion yuan ($9.6 billion) over the next five years as it shifts support to research and infrastructure.

China has said it wants to put 5 million new-energy cars and trucks on the road by 2020. But sales to date are behind schedule. Bloomberg reports deliveries of new-energy vehicles totaled 331,100 units last year.