climate-changed

China Raises Subsidies to Reward Longer Range Electric Cars

Updated on
  • Minimum subsidy benchmark elevated to 150km from 100km
  • Subsidies increased for EVs with more than 400km range

A BYD E6 electric taxi

Photographer: Qilai Shen/Bloomberg

China is increasing subsidies for electric vehicles that can travel longer distances on a single charge, while also making it more difficult for battery-powered automobiles to qualify for any new incentives under a central government plan.

The central government incentive for electric cars that have a range of 400 kilometers (249 miles) and beyond on a single charge has been raised to 50,000 yuan ($7,900) from 44,000 yuan, the finance ministry said in a statement dated Tuesday. At the same time, vehicles have to be able to go at least 150 kilometers on a single charge to be eligible for incentives, up from 100 kilometers previously.

Incentives at central and provincial levels have been key to making electric vehicles more affordable in China, helping the market surpass the U.S. as the world’s biggest in 2015. The Chinese government is leaning toward allowing provinces to continue with local subsidies for EVs to sustain the rising demand for new-energy automobiles in the country, Bloomberg News reported.

The new rules, which went into effect Feb. 12, also cut subsidies by varying degrees for cars with a driving range of less than 300 kilometers, according to the statement. Separately, only electric cars with battery energy density above 105 watt-hours per kilogram are eligible for the subsidies under the new rule. The threshold was raised from 90 watt-hours per kilogram.

Bus Subsidies

The government also cut subsidies by as much as half for buses that qualify as new-energy vehicles, depending on the length and nature of the powertrain.

Among China’s leading electric-bus makers, shares of Xiamen King Long Motor Group Co. fell as much as 2.1 percent in Shanghai Wednesday.

BYD Co. jumped as much as 5.5 percent in Hong Kong trading to HK$72.65, the biggest intraday gain in more than three weeks. China’s largest maker of new-energy vehicles has said it plans to introduce three EV models with a driving range of at least 400 kilometers in the first half.

BYD and other Chinese-car manufacturers including BAIC Motor Corp. and Anhui Zotye Automobile Co. have all benefited from subsidies given by China as the nation tries to encourage production of less-polluting vehicles.

The latest policy aims to discourage protectionism by asking provincial governments to avoid rules that unduly favor local manufacturers and suppliers while administering the subsidies. Some automakers have complained of invisible barriers outside their home province, and find it time-consuming to get funding approvals.

— With assistance by Yan Zhang, and Sarah Chen

(Updates with incentive cuts for NEV buses in fifth paragraph.)
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