In key moments of the development of new energy vehicles, various sectors are highly sensitive to policy changes. Recently, rumors about the early withdrawal of new energy subsidies have been circulating widely, causing a sharp drop in automotive stocks. According to an online circulated 2018 subsidy plan, subsidies for new energy passenger cars are now categorized based on driving range, moving from three tiers in 2017 to five tiers, with the minimum threshold raised to 150km. The subsidy continues, but those with ranges over 300km receive more support, clearly encouraging manufacturers to focus on producing high-quality, energy-efficient vehicles.
The subsidy reduction was previously outlined by several government ministries, including the Ministry of Finance, the National Development and Reform Commission, and the Ministry of Industry and Information Technology. Based on last year’s policy direction, new energy vehicle subsidies were scheduled to decrease by 20% in 2019 and by 40% in 2020 compared to 2016 levels, with full withdrawal by 2020. If the latest 2018 policy is finalized, it could represent a nearly 40% cut, effectively accelerating the subsidy reduction schedule by one year.
Although no official confirmation has come from the Ministry of Finance or the Ministry of Industry and Information Technology, signals suggest that the country is shifting its support from direct subsidies to more strategic guidance. This change will likely impact companies producing low-range A00 electric cars and those focused on electric buses.
Since the 2015 announcement of subsidy withdrawal, the industry has been encouraged to reduce costs, invest in R&D, and develop long-range products. However, incidents like "cheating for subsidies" revealed that some companies did not take the phase-out seriously, still hoping for continued support.
As market-driven policies push the industry forward, early adaptation becomes crucial. For traditional automakers entering the new energy sector, while the subsidy withdrawal may cause short-term pain, adapting quickly can help minimize the impact and shift from passive to proactive strategies.
At the 5th Automotive and Environmental Innovation Forum hosted by Gasgo Motors, Gao Jingjing, project director at Geely Automobile Research Institute, emphasized that Geely's "Blue Geely Action" strategy, launched in 2015, aims for over 90% of its sales to come from new energy vehicles by 2020. Geely has already been making progress toward this goal.
Geely’s new energy vehicles currently follow three main technical routes: pure electric (EV), plug-in hybrid (PHEV), and hybrid electric (HEV). Its EV platform includes models like Emperor Pure Electric, with future upgrades planned. The next-generation PMA platform is expected to match world-class EVs. On the PHEV side, the Dorsett PHEV was recently launched, and the CMA platform with Volvo will introduce both traditional and plug-in hybrid models. The 7DCTH platform will integrate Volvo technology into Geely models, with new models expected next year.
Guangqi Auto, under Chief Technical Director Qi Hongzhong, has also been actively developing new energy technologies. Although current sales are modest, the company has been researching new energy solutions for years, launching several models this year. They are also working on new energy models for joint venture brands, marking a shift from independent to collaborative development.
GAC has developed multiple core technologies, including battery systems, motor units, and electromechanical coupling systems. Their pure electric platforms include two EV systems and three HEV/PHEV platforms. By 2019, GAC plans to launch new EV and PHEV models, with third-generation EV and PHEV platforms set for 2021.
FAW Group has also prioritized new energy vehicle development. Wang Deping, Deputy Director of FAW’s New Energy Office, explained that they merged divisions to create a dedicated new energy institute. FAW’s “1233†strategy includes building a 48V platform, two hybrid platforms, and three pure electric brands, with plans to release these by early next year.
While focusing on new energy, traditional vehicle efficiency remains important. Wang noted that different vehicle classes require tailored approaches—A-class using 48V tech, B-class using HEV, and C-class using PHEV to meet fuel consumption standards.
Zhan Yusong of Changan Auto echoed similar views, emphasizing that different electrification paths have varying performance and cost implications. He suggested hybrid-based models supplemented by pure electric or 48V systems as viable options under current subsidies.
Cui Dongshu of the National Passenger Vehicle Market Information Association believes that subsidy adjustments will promote better products and eliminate weaker players. While the 2018 policy is not yet confirmed, companies must focus on innovation and cost reduction. As the new energy sector matures, success will depend on market forces, policy, and technological advancement—not just subsidies.
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