Rumor: China To Cut Electric Car Subsidies to Encourage Innovation
China has largely led the worldwide surge in electric vehicle demand, in large part due to its huge “New Energy” vehicle subsidies as well as quotas on how much of an automaker’s sales must be New Energy vehicles. However, now that China has gotten to this place, it doesn’t seem to be super happy about it. Instead, according to anonymous sources talking with Bloomberg, it is considering a reduction in electric-vehicle subsidies next year to push its automakers to innovate on their vehicles rather than rest on fiscal policies to drive demand.
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Again according to the nameless sources (who Bloomberg says are anonymous because they were discussing information that wasn’t public), the new policy would reduce average purchase incentives per vehicle by more than a third from where they are now. In addition, to qualify for subsidies vehicles might be required to move at least 200 kilometers (about 125 miles) on a single charge. Current rules have the cutoff at 150 kilometers.
These new rules are still up in the air, the sources say, so they are subject to change.
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This would hopefully move the vehicle sales approach away from the “just so long as it is electric” end of the spectrum toward the “actually competitive vehicles” end. So, in a way, it is moving away from giving away fish and instead teaching people how to fish (or, more accurately, handing them a pole and some bait and saying “figure it out”). The Chinese government apparently feels that the automakers need to rely more on their own innovation to be commercially viable.
Hopefully, this would also mean the introduction of better and longer-range electric vehicles for the U.S. market, as well.
News Source: Bloomberg (subscription required)
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