China Scaling Back And Tightening Requirements For Plug-in Subsidies

Manufacturers of plug-in electrified vehicles in China will be having their subsidies reduced starting next year and requirements tightened, as the government cracks down on misreporting by makers.

The Ministry of Finance posted documents on its website yesterday outlining caps on subsidies and increased technical specifications required to receive funding on plug-in electrified vehicles (PEVs), Reuters reported. The revised rules cover makers of electrified buses, passenger cars, and commercial trucks.

It all stems from a subsidy cheating scandal that broke in September. Vehicle manufacturers were penalized for misreporting production and sales data, and not meeting technical requirements needed to receive more “new energy vehicle” government funding.

Manufacturers of all-electric and plug-in hybrid coach buses will see the biggest hit, with subsidies being maxed out at 300,000 yuan ($43,000) per vehicle, which was about half the previously highest subsidy of 600,000 yuan (about $86,000).

For passenger cars, the new policy delivered on earlier announcements by the government to roll back subsidies for all-electric and plug-in hybrid vehicles starting with a 20 percent reduction in 2017.

For lorries (medium and heavy-duty trucks) and specialized-use vehicles, central government subsidies will be capped at 150,000 yuan ($21,584).

The subsidy program for fuel cell vehicles will remained unchanged.

Local government subsidies will also be capped at 50 percent of subsidies awarded by the national government under the new policy. All policy changes will be implemented as of January 1, 2017.

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As for technical specifications added to the policy, a new system is being adopted to further regulate electric vehicles by type. Measurements will include minimum energy density and range requirements.

Buses will be gauged by their energy density, charging speed, and for plug-in hybrid buses, by their fuel efficiency. Buses capable of receiving fast charging will benefit, with fast-charging coach buses able to receive about two-thirds more in incentives than those charging at normal speeds.

New energy vehicle funding is considered to be the leading cause of China’s boom in sales of plug-in electrified vehicles. The government spent about $4.5 billion last year on subsidies to help clean up heavy air pollution in cities and to take the leading role in global PEV sales. Sales figures were quadrupled in 2015 and are expected to grow by about 60 percent this year, according to Reuters.

However, the cheating scandal has called these sales numbers into question.

Earlier this year, the national government announced that new energy vehicle funding will end after 2020.

Reuters also reported that prominent automakers, in terms of sales of PEVs in China, include BAIC Motor Corp., BYD Co., and BMW.



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