Electric vehicle subsidy, paid for 13 years from 2009
30 trillion won in subsidies from BYD and Tesla
Expected sales of 9 million electric vehicles next year
[아시아경제 최대열 기자] China has decided to eliminate subsidies for the purchase of electric vehicles from next year. It started in 2009 and spent about 30 trillion won for 12 years, and now it has judged that the domestic electric vehicle industry is competitive even without subsidies.
According to the data compiled by the KOTRA Shenyang Office on the 31st, China’s Ministry of Finance, Ministry of Industry and Information Technology, Ministry of Science and Technology, and National Development and Reform Commission, four ministries, issued purchase subsidies in the ‘Notice on Subsidy Policy for the Promotion of New Energy Vehicles in 2022’. It was announced that it would be paid only by this day. New energy vehicles refer to pure electric vehicles and plug-in hybrid vehicles.
Since 2009, the Chinese government has provided subsidies to increase the adoption of electric vehicles. Unlike Korea, it was given to electric vehicle manufacturers. When a company informs the local government of its electric vehicle sales volume and applies for a subsidy, the government executes it after an expert review. Because the vehicle price was reflected in the subsidy, the selling price was lowered and consumers were able to purchase at a cheaper price.
KOTRA said that the subsidy received by Chinese electric car companies so far is a total of 160 billion yuan (approximately 29.528 trillion won). BYD, China’s No. 1 company, received the most with 7 billion yuan (1.29 trillion won). American brand Tesla received 3.5 billion yuan (646.6 billion won).
China is ranked first in terms of production and sales of electric vehicles as well as existing internal combustion engines. According to the China Automobile Manufacturers Association, despite disruptions due to Corona 19 and intensive quarantine measures, finished car production reached 21.7 million units and sales reached 21.29 million units from the beginning of this year to last month.
The abolition of subsidies is a predictable result to some extent. In the meantime, the amount has been steadily reduced to reduce dependence on subsidies. In the early days of the subsidy policy, up to 60,000 yuan (11.26 million won) was paid per unit, but in 2017, the limit was reduced by 20%. In 2019, it decreased by 40% from a year ago and this year by 30% from last year.
The standards for subsidies were also raised. In 2018, subsidies were given only to vehicles with a cruising range of 150 km (distance that can be driven on a single charge). The standard was raised to 250 km in 2019 and 300 km recently.
KOTRA predicted that sales prices would rise as the subsidies were eliminated. BYD raised the price by up to 6,000 yuan (1.11 million won), and Aian, a subsidiary of Guangzhou Motor Company, recently decided to raise the price by up to 8,000 yuan (1.48 million won).
Electric vehicle sales next year are expected to increase by 35% from this year to 9 million units. In this case, the proportion of electric vehicles among all new cars sold will increase to 32.6%. That means one out of three cars is an electric car. While the price competitiveness of local companies is expected to decrease somewhat due to the abolition of subsidies, KOTRA predicted that new opportunities will arise for domestic finished car makers and battery companies that have had difficulty entering the local market due to subsidy issues.
Reporter Choi Dae-yeol dychoi@asiae.co.kr
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China to eliminate subsidies for electric vehicles
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