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Bloomberg
China said it’s scaling back subsidies on electric vehicles to encourage local manufacturers to rely on innovation rather than government assistance as the industry matures and costs fall. The cuts were deeper than expected and shares of the country’s top EV makers slid.
The subsidy for pure battery electric cars with driving ranges of 400 kilometres (250 miles) and above will be cut by half, to 25,000 yuan ($3,700) per vehicle from 50,000 yuan, the Ministry of Finance said in a statement. To qualify for any subsidy, electric cars need to have a range of at least 250 kilometres, compared with 150 kilometres previously, the ministry said.
The government had warned of its plans to scale back subsidies and phase them out completely after 2020, though it hadn’t given details. While financial support for purchases has fuelled the rapid growth of China’s electric-car industry, there are concerns that automakers have become overly reliant on them at the expense of developing new technologies and better vehicles.
Shares of BAIC BluePark New Energy Technology Co, the electric car manufacturing unit of BAIC Motor Corp, fell as much as 3.5 percent in Shanghai. BYD Co, the country’s top seller of new energy vehicles, dropped as much as 4.2 percent in Hong Kong.
BAIC BluePark said in a statement it may raise vehicle prices going forward amid “certain and even relatively huge†pressure on the industry. BYD issued a statement saying it has made full preparations for adapting to the new circumstances. Manufacturing scale and an edge in technology make the company resistant to risk, it said.