It is the key to speeding up the subsidy of new energy vehicles

The development, promotion, and popularization of new energy vehicles are not only essential for reducing pollution but also a necessary step for human society to decrease its reliance on oil and prevent the overexploitation of fossil fuels. As this industry is still in its early stages, future growth should focus on advancing high-efficiency solar panels and maximizing the use of solar energy—an abundant and sustainable power source. However, there are growing concerns about the sustainability of government subsidies for electric vehicles. It has become clear that subsidy reductions are no longer just a possibility but an inevitable reality. Reports suggest that in 2018, the subsidies for new energy vehicles will be significantly cut, especially for models with a driving range under 150 kilometers, which may see their support completely phased out. Local governments are also expected to stop offering additional financial incentives. Although these reports have not been officially confirmed, the industry widely acknowledges that subsidy cuts are becoming a trend. This shift means that car manufacturers must now focus more on developing competitive products rather than simply relying on financial support. The reduction in subsidies is pushing companies to innovate and improve performance to stay relevant in a rapidly evolving market. Over the past few years, policy support and financial incentives have fueled rapid growth in the new energy vehicle sector. According to recent statistics, in the first 11 months of this year, production and sales reached 639,000 and 609,000 units respectively, showing increases of 49.7% and 51.4%. Pure electric vehicles remained the dominant force, with production and sales at 532,000 and 504,000 units—up by 56.6% and 59.4%. Plug-in hybrid vehicles also saw steady growth, with 107,000 and 105,000 units produced and sold, respectively, up 22.5% and 21.8%. In the second half of the year, the commercial vehicle segment of the new energy market began to show strong momentum, with November’s sales hitting an all-time high of 36,000 units. Despite this growth, the market is showing a “low before high” trend, where initial demand was relatively modest, but it has since picked up sharply. Xu Haidong, assistant secretary-general of the China Automobile Association, noted that the growth rate in the first 11 months aligned with the association's expectations. He confidently stated that the target of selling 700,000 new energy vehicles this year would likely be met. He even predicted that next year’s sales could exceed one million units. However, according to the policy announced last year, subsidies for new energy vehicles will decrease by 20% in 2017–2018, and by 40% from 2016 levels in 2019–2020, with full withdrawal by 2020. In response, Lu Huaping, assistant secretary-general of the National Association of the United States, revealed that the government is currently reviewing and adjusting the subsidy policy for 2019. The focus is shifting toward encouraging high-mileage, low-energy vehicles. It is also likely that local subsidies will be gradually withdrawn. At the same time, a discussion paper outlining the direction of future subsidies is circulating online. A source familiar with the matter mentioned that the document originated from a small seminar and is still in the consultation phase. Compared to the 2017 subsidy program, the most significant change in the new proposal is the reclassification of passenger cars based on their driving range. Vehicles with less than 150 km of range will no longer qualify for subsidies. For example, the 20,000 yuan subsidy for the 100–150 km range has been eliminated, while the 150–200 km range will see a drop from 36,000 to 20,000 yuan. Other ranges have also seen adjustments, with some receiving slight increases and others facing reductions. Industry insiders believe the intent behind these changes is clear: to encourage the production of higher-quality, long-range electric vehicles. Many manufacturers, particularly those with weaker capabilities, have struggled to produce reliable models, and there are concerns that some may be exploiting the subsidy system. Cui Dongshu, secretary-general of the National Federation of the United Nations, emphasized that 2018 is a crucial period for the new energy vehicle industry. The revised subsidy policy will guide consumers toward purchasing vehicles that meet the standards, while those that do not will be weeded out by the market. This will raise the overall quality threshold for the industry and push substandard models out of the market.

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