In late March, China announced the 2019 adjustment to its decade-long central subsidy program for new energy vehicles (NEVs). The program was introduced as the Ten Cities, Thousand Vehicles project in 2009, and is set to be phased out after 2020. NEVs are battery electric, plug-in hybrid, and fuel cell vehicles, and this adjustment explains how to determine the subsidy granted to consumers who buy a new battery electric or plug-in hybrid vehicle in 2019. (Unlike prior adjustments, it does not apply to fuel cell vehicles or new energy buses.) The figure uses real-world examples to illustrate 2019 subsidy amounts alongside those from 2018 for different vehicle types. As shown, the subsidy size of most of the vehicle types got slashed by half or more. The incremental phase down and ultimate elimination of NEV subsidies serves to make NEV market growth in China less dependent on fiscal support. It also relieves the financial burden on the central government. Together with a new NEV mandate policy that requires a certain percentage of electric vehicles in new fleets starting in 2019, this has the potential to drive China’s electric vehicle market after 2020.
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