As of 1 January, the Chinese government no longer provides subsidies to buyers of electric vehicles (EVs), but other policies will keep stimulating the industry. The government started granting subsidies to EV buyers in 2010, to level the price difference with combustion vehicles and to support commercialisation. Initially set to stop at the end of 2020, the subsidy was extended to 2022 due to the pandemic and its economic impact.
Developing EVs used to be seen only in reducing air pollution in China, but in recent years carbon emissions are also discussed. Despite the end of subsidies, most experts believe the EV market will keep growing. Car companies have devoted significant R&D resources to EVs, and consumer interest has grown significantly. EVs are gradually transitioning from policy-driven to market-driven, Nishita Aggarwal, the Economist Intelligence Unit (EIU) industry analyst, told the BBC.
Meanwhile, some other incentives remain. EV buyers are entitled to a 10% purchase tax exemption until the end of 2023, which had initially been planned to end with the subsidy. Also, the government has been putting more teeth into the green car credit system that sets annual compliance requirements for car makers. Companies that exceed the EV proportion target can sell surplus credits, while those who fail must buy credits or pay a fine. An even stronger policy would be to ban the sale of combustion vehicles. This is controversial in China, but local governments could lead the way. In August 2022, the government of Hainan province proposed a complete ban on the sale of combustion cars by 2030 in its implementation plan for peaking carbon emissions.