China to offer drivers up to CNY 10,000 ($1,380) to trade in old cars. The measure is aimed at boosting consumption & economy. After recent auto loan policy with 0% down payment for EVs, we anticipate accelerated adoption.
....China is doing this to shore up and boost its economy in the short term.
....at the same time, such short term incentives to boost EV demand helps EV makers to produce large quantities of vehicles to lower per unit production cost (fixed costs spread out over larger number of production units= lower fixed cost per unit) allowing them to sell those EVs at even cheaper prices.
....they help boost EV growth in China, allow Chinese EV makers to swamp international markets to gain a foothold and absorb overcapacity in battery and lithium supply.
....BUT this 'fake' incentivised EV demand will wane once the short term incentives expire and all those who want to convert to EV have done so, and within a year or so, in tandem with much less stronger economy, EV demand in China could actually moderate significantly.
....So don't get sold on high EV growth stemming from China.
