China said it will cut subsidies on new-energy vehicles by more than it previously considered, even as sales lag behind an official target.
The finance ministry will reduce subsidies on new-energy vehicles by 40 percent in 2019 to 2020 from that in 2016, according to a statement posted on the ministry’s website Wednesday. The amount is double the quantum of the cut the ministry said it was considering in December.
Most automakers in China have been introducing new-energy vehicle models, spurred by financial incentives and exemptions from registration restrictions. The government has been gradually lowering subsidies to encourage automakers to make more competitively priced products.
“This will force carmakers to speed up product development and make their electric cars and hybrids cheap enough to lure consumers even without government’s financial help,” said Song Yang, an analyst with Barclays Plc.
The government previously said in a proposal seeking public opinion in December that it plans to cut the funding on electric cars and hybrid cars by 10 percent in 2017 from the level in 2016 and then followed by another 10 percent of deduction in 2019 from the level in 2017.
— With assistance by Tian Ying