China Cuts EV Incentives By 30% As Tesla Raises Prices

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China has always said it wants it EV incentives to be reduced to zero over time. On the last day of 2021, the Finance Ministry announced the government incentive for purchasers of a so-called new energy vehicles would be cut by 30% beginning January 1, 2022. It also announced all incentives would be terminated as of the end of this year. This announcement was in line with what the government has been saying all along as it strives to boost NEV sales to 20% of all new cars sold in China by 2025.

According to Reuters, NIO told its customers last week that it would absorb the difference between the old subsidy and the new subsidy if the buyer put down a deposit before midnight on December 31, 2021 and takes delivery before March 31, 2022. NIO also gets special treatment under the new policy. According to CnEVPost, the cutoff for any subsidies is a selling price of more than RMB 300,000 ($47,200). But there’s more to the story.

The upper price limit does not apply to cars that have swappable batteries. NIO’s vehicles all sell for more than RMB 300,000 but have batteries that can be swapped. Therefore, its customers are still eligible for a subsidy of RMB 11,340 ($1,784) for a model with a standard 75 kWh battery pack or RMB 12,600 ($1,982) for a model with a 100 kWh battery pack. For more on this topic, see the latest video from The Electric Viking.

Tesla Raises Prices In China

Supply and demand are the bedrock components of all economics. The demand for Tesla products is surging in China, which (along with supply chain challenges) has led the company to raise prices twice in the last month by a total of about 6% for the Model 3 and about 9% for the Model Y, according to the South China Morning Post. “Tesla’s increasing popularity in China and Asia has resulted in a widening gap between its capacity and demand for its vehicles,” says Eric Han, a senior manager with business advisory group Suolei in Shanghai. “The higher prices are aimed at curbing consumer demand and easing production woes,” he adds.

Even after this latest price increase, the Model 3 in China is 11% cheaper than it was when it was first introduced to Chinese customers two years ago, says SCMP.

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