Published on February 18th, 2014 | by Christopher DeMorro1
China’s EV Subsidies Have Been Extended, But Is That Enough?
February 18th, 2014 by Christopher DeMorro
In a surprise announcement, Chinese EV subsidies have been extended as the government grapples with an epic pollution problem and slow green car sales. Despite its many cities literally choking to death on their own smog though, the government has yet to implement any meaningful changes to its transportation policy.
The Chinese EV subsidy program first began in either 2008 or 2009, and though some heralded it as the beginning of an electric car revolution, confusion and limitations have made for poor electric car sales. These subsidies were generous, with incentives as high as $9,800 for an electric car, $5,800 for a plug-in hybrid, and over $80,000 for the purchase of an electric bus.
The program was due to be phased out entirely by the end of 2015, with cuts in payouts over the next couple of years. However, government officials announced that the reductions in payouts would be 5% for EV buyers instead of 10%, and 10% instead of 20% for plug-in hybrid buyers, and the program will continue through at least the end of 2016. It’s a welcome bit of good news for Chinese EV investors who bought into companies like green car companies like BYD, which saw its stock price surge some 10% thanks to the good news.
Unfortunately, these EV subsidies were hampered by confusion and limitations from the start. The subsidies were only available in some 13 cities initially, and though the program later doubled in size, it only applied to domestically-made cars. With Chinese EVs in their infancy at the time, and foreign automakers unable to benefit from the subsidies, sales of electric cars with fairly pathetic. In 2012, just 11,241 EVs were sold throughout all of China, with plug-in hybrids selling just 1,311 units. In 2013 EV sales rose to just 14,604 EVs and 3,038 plug-in hybrids.
Does it sound like I’m being a bit harsh? Well the state of California bought more electric and plug-in hybrid cars than the entirety of China, and the communist country’s goal of 5 million plug-in vehicles by 2020 seems like an impossible fairy tale, barring some sort of divine or governmental intervention. More importantly though, the epic levels of smog are becoming a serious problem for the Chinese government.
Subsidies obviously aren’t enough though, and China should consider the Norwegian method of encouraging hybrid and electric car use, which can be summed up in three words; tax, tax, and taxes.
Source: China Car Times
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