China is cutting subsidies for electric cars – what does this mean for manufacturers like Tesla, BMW and Daimler?



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China says promoting electric cars remains a high priority for the country, but not all electric cars will be supported.

Although the subsidies have been reduced, they will only apply to electric cars that cost less than 300,000 yuan or just over 39,000 yuan. euros

The Model 3 sedan manufactured by Tesla in China has a current price of 323,800 yuan or 42,255 euros. Therefore, the company is right next to that limit and can find cheaper cars. Here, it will largely depend on how buyers will react to these changes.

However, it is likely that not only Tesla, but also BMW and Daimler will respond to the new regime and the approved “ceiling” of support. For those companies that offer slightly more expensive electric car models.

China has set itself the goal of promoting so-called “new energy vehicles,” including various types of electric, hybrid, and hydrogen-powered cars.

The country wants sales of these vehicles in China to account for 25 percent of all car sales by 2025. This means that from the current level, these sales will have to grow another 5 percent.

According to Reuters, China’s goal is “to reduce pollution and expand (own) car industry champions.”

To date, subsidies for electric cars in China have amounted to approximately € 3,200, as well as other sales-related taxes. So now the support will be slightly reduced.

Reuters also reports that the Chinese government will provide more support to cars that integrate technical options to replace batteries.

A good decision. Only, of course, China has its own interests here. Such technology is offered by Chinese electric car manufacturers like Nio and BAIC BluePark.

It is worth noting that the plan to reduce subsidies for electric cars was approved in 2015 and 10%. the decrease would take effect from the beginning of this year. However, the old order lasted until March. This is likely to be more relevant to the financial consequences of the coronavirus pandemic.

While subsidized vehicle sales reportedly decreased for the ninth consecutive month, sales in March increased 50 percent year-over-year. smaller, but there are also good signs. Sales in March were 3 times higher than in February, when the coronavirus soared in the country.

China’s Ministry of Finance announced that subsidies for electric cars will continue to decrease: 20% in 2021 and 30% in 2022.

And even in all of this context, electric car sales are returning to normal sales faster compared to the entire market.

The same Tesla company sales in China in March were the best and the best-selling electric car was the Model 3. A quarter of the electric cars sold in China in March were Tesla cars.

The new subsidy regime could slow Tesla sales down a bit. On the other hand, the difference between the maximum amount of support and 10%. Reduced is very small, so buyers who are very interested in a Tesla electric car should not make such a change more significant.



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