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Subsidies for Private Purchases of Low and Zero Emission Vehicles Stalled in China?

February 16th, 2010 · No Comments

According to the Nanfang Daily, you shouldn’t expect a government subsidy when you buy a hybrid or electric vehicle in China in the near future.  Although the State Council announced last December that it would select five cities to test subsidies for the private purchase of “new energy vehicles,” issues surrounding the form and amount of the subsidies remain unresolved.

Amount of Subsidy

Subsidies are in place in 13 pilot test cities for purchases of passenger cars and light commercial vehicles for “public service.”  Hybrid vehicles meeting certain criteria and on a list published by the government are eligible for an RMB 50,000 subsidy and pure electric vehicles are eligible for an RMB 60,000 subsidy.1  Commentators quoted by Nanfang Daily stated that subsidies for “private purchase” needed to be higher than those for government purchase in order to be effective.

Local v. Foreign

As Zhang Zhiyong, an auto analyst noted, “in China subsidies are bound to promote local protection.”  The article states that foreign companies have an edge in established model lines and the maturity of technology; therefore, if a general subsidy policy was implemented, it would be “very detrimental to domestic automobile companies.”  Zhang believes that the subsidies should be “aimed at the promotion of local enterprises.” “Local” in this context does not always mean Chinese vs. foreign.  Many cities are inclined to administer subsidy programs so that they give preferences to companies with strong ties to the city.2

  1. See http://www.chinadaily.com.cn/bizchina/2009-08/18/content_8581540.htm.  Only domestic Chinese brands are on the list.
  2. For instance, Chongqing gives a subsidy Jiexun brand hybrid sedan made by Chongqing Changan Automobile Co. that according to Reuters calculations “is equivalent to a 31 percent discount for the hybrid sedan” http://www.reuters.com/article/idUSSHA1453120090515.

Tags: LEV and EV · car culture · vehicle subsidies