China’s Provinces Offer EV Sweeteners as National Subsidies Fade
Auto executives are watching closely for what, if any, new state support for the electric-vehicle sector may emerge from this week’s annual legislative conference.
An XPeng flagship store in Beijing.
Source: Bloomberg
China’s week-long annual kicked off on Sunday. As the cavernous Great Hall of the People at Tiananmen Square packs full of the country’s political elite, auto industry executives are watching closely for what, if any, new state support for the electric vehicle sector may emerge.
National subsidies that at one point handed as much as 60,000 yuan ($8,700) back to electric-car buyers were key to spurring uptake of EVs in China. For the most part, they’ve been a runaway success: China is the world’s biggest market for electric cars, with shipments of new-energy passenger vehicles almost doubling last year to 6.5 million.
But national subsidies fell away at the end of the year, and while EVs are still selling at a pace that puts other countries to shame, growth has slowed. Auto executives have started to call for bringing subsidies back at the national level.
Feng Xingya, president of state-backed Guangzhou Automobile Group Co., is a delegate at this year’s National People’s Congress and said last week that he would support reinstating a national purchase sweetener and extending a tax exemption.
Beijing has said it’s working on new policies to support the industry. In the meantime, local governments have taken it upon themselves to stimulate demand.
Here’s a look at some of the goodies on offer around China for consumers going electric:
Shanghai — Residents in China’s financial hub, which has one of the highest EV penetration rates in the country, can get one-time cash back of 10,000 yuan when they buy a new EV to replace an existing gasoline car.
Beijing — The capital will continue a subsidy to reward those who trade their gasoline cars in for EVs. Owners who de-register internal combustion engine cars that are one to six years old can receive 8,000 yuan, while those who replace ICE vehicles older than six years get 10,000 yuan. The incentives helped stimulate 5 billion yuan of electric-car sales in the second half of 2022, according to the Beijing government.
Hubei — The province that counts Wuhan as its capital kicked off “the biggest car-sale subsidy season” this month, with cash back offers starting from 5,000 yuan. Piggybacking off the campaign, state-backed Dongfeng Motor Group Co. has begun offering further discounts on several of its Citroën, Nissan and Honda models. The Citroën C6 gets the highest cash back amount at 90,000 yuan when the provincial subsidy and the Dongfeng promotion are included, according to local media reports.
Sales Slowdown
Citroen C6's unit sales in China have been weakening since last year
Sources: China Automotive China Evergrande’s EV Unit May Shut Down Without New FundingTechnology and Research Center, Bloomberg Intelligence
Shandong — The eastern province has said it will hand out 200 million yuan of shopping vouchers to buyers of new EVs, with people who trade in their old cars getting at least 7,000 yuan to spend.
Zhengzhou — The manufacturing hub in central China has also gone the shopping-voucher route, offering around 150 million yuan of vouchers starting at the beginning of this year for residents who buy EVs. People can get vouchers between 4,000 and 6,000 yuan to use in local shops and supermarkets, as well as restaurants. There's an incentive to act fast, because once the 150 million yuan pool is gone, there's no guarantee there will be another batch.
Hunan — This southern province will reimburse people 5,000 yuan if they de-register their used ICE car and purchase a new EV. The plan is part of a goal to produce more than 1 million EVs in Hunan, where companies including Berkshire Hathaway-backed BYD Co. and Zhejiang Geely Holding Group Co. have manufacturing facilities.
— With assistance by Jinshan Hong
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