Industry News: China Considers Cutting EV Subsidies

[William Maley]

Like many countries, China offers various incentives to spur the sales of electric vehicles. But a report from Bloomberg says the Chinese government is considering reducing various subsidies beginning next year. 

According to sources, the government is considering cutting the average incentive by more than a third from where they currently stand. Also up for consideration is incentives being eligible on models that can travel at least 200 kilometers (about 125 miles) on a single charge. Why? The government wants automakers to keep innovating by making EVs cheaper and go much further on a charge.

“China is switching away from carrots. The government wants to ensure automakers will launch models that would be appealing to consumers hence setting subsidies contingent on minimum driving range requirements,” said Ali Izadi-Najafabadi, an analyst at Bloomberg NEF.

In 2017, the Chinese government spent 6.64 billion yuan (about a billion dollars) on various subsidies for electric vehicles. But this year saw the government begin to cut various incentives. For example, cars that have a driving range of less than 300 kilometers (about 186 miles) saw their incentives reduced. 

“Government policy has a huge impact over the new-energy vehicle sector and every adjustment made on the policy front over the next two years will result in tremendous changes in the industry,” Li Yixiu, sales chief for Beijing Electric Vehicle Company earlier this month.

"We believe there isn’t a chance for carmakers to raise prices to make up for the reduction of government fundings. Instead, we have to come up with competitive new products and services to respond.”

Source: Bloomberg

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[G. David Felt]

Since China has already set dates for the end of ICE Auto's, I totally agree with cutting the free cash and let the automakers duke it out on the quality of their auto they build.

I do like the idea of a rebate for building an EV or Hybrid auto based on how far it can travel.

Heck, best way to spend some tax dollars would be to use the incentive to pay gas stations to install and convert over to charging stations.

[riviera74]

Paying gas stations to install charging stations is probably NOT a good idea.  Instead of subsidies, China should ditch all oil subsidies NOW and raise oil taxes (which will raise gas prices).  I am not sure how China is actually going to reduce the number of already existing ICE cars and go fully electric without higher prices on crude oil first.

[Drew Dowdell]

being a controlled economy, they can slowly increase the price of gasoline. take the profits and use them to subsidize electric charging station installations. 

[G. David Felt]

Interesting story on Oil and why by 2020, analyst are thinking that a barrel of Oil will be between 150 to $200 a barrel due to demand in the Asian rim, specifically China. This is also not just because their car market is taking off.

https://www.greencarreports.com/news/1117681_oil-prices-could-double-by-2020-boosting-electric-car-sales

[riviera74]

Even at $100 a barrel, nearly all types of oil extraction becomes very plausible and possibly very profitable.  $150-$200 a barrel will not be sustainable over the medium or long term because of this.

[Drew Dowdell]

Absent global strife, oil prices at $150 - $200 a barrel become a check valve because overproduction starts to kick in and there are now enough players for one to play the spoiler and overproduce at those prices to bring the prices per barrel down. 

[G. David Felt]

@riviera74 @Drew Dowdell Yet the story also states that consumption in Asia, especially China would absorb that increased production that would keep the oil prices high.

Thoughts on that?

[Suaviloquent]

Plus when oil is that high, the black market price of oil is enough to pull Venezuela out of it’s stagflation.

 

Pretty much oil might hit $200 a barrel but that might be lack of production associated, and don’t forget EVs are supposed to displace oil. 

[G. David Felt]

43 minutes ago, Suaviloquent said:

Plus when oil is that high, the black market price of oil is enough to pull Venezuela out of it’s stagflation.

 

Pretty much oil might hit $200 a barrel but that might be lack of production associated, and don’t forget EVs are supposed to displace oil. 

Until Venezuela moves on beyond Socialism, they are going to have a hard time investing and upgrading their decrepit oil sector. I honestly DO NOT see high oil prices helping out that country.

EV's will displace oil, while consumption will continue as many products including internal and external parts on auto's are built using oil, various types of plastics, etc. Natural gas is the future fuel that will power a bulk of electrical generation for EV's. We reduce green house gas and more importantly clean up the air in the inner city areas and improve by reducing noise pollution such as the crazy illegal open pipes of motorcycles and cars built for street racing.

Racing will especially from the street replace ICE once they realize they are harder to detect by the police due to how quiet they are and can sneak around. This is a reason I see both police and the public embracing ev auto's, the silent sneak attack.

[Suaviloquent]

23 minutes ago, dfelt said:

Until Venezuela moves on beyond Socialism, they are going to have a hard time investing and upgrading their decrepit oil sector. I honestly DO NOT see high oil prices helping out that country.

That was some especially dry sarcasm on my part.

 

i had hoped no one would think I seriously believe Venezuela is being pulled out of it’s problems as if oil hits $200 a barrel the world will probably crumble.

[Drew Dowdell]

13 hours ago, dfelt said:

@riviera74 @Drew Dowdell Yet the story also states that consumption in Asia, especially China would absorb that increased production that would keep the oil prices high.

Thoughts on that?

Unless everyone is pumping at 100%, which they aren't, oil producers can increase production faster than Chinese industry can increase car sales.  Furthermore, as the price of oil goes up, indirect industry tends to slow.  The oil prices going up rapidly is one of those Series of Unfortunate Events that helped to cause the last big economic meltdown. 

50 minutes ago, dfelt said:

Until Venezuela moves on beyond Socialism, they are going to have a hard time investing and upgrading their decrepit oil sector. I honestly DO NOT see high oil prices helping out that country.

EV's will displace oil, while consumption will continue as many products including internal and external parts on auto's are built using oil, various types of plastics, etc. Natural gas is the future fuel that will power a bulk of electrical generation for EV's. We reduce green house gas and more importantly clean up the air in the inner city areas and improve by reducing noise pollution such as the crazy illegal open pipes of motorcycles and cars built for street racing.

Racing will especially from the street replace ICE once they realize they are harder to detect by the police due to how quiet they are and can sneak around. This is a reason I see both police and the public embracing ev auto's, the silent sneak attack.

Socialism isn't the issue.. corruption is. 

[G. David Felt]

2 hours ago, Suaviloquent said:

That was some especially dry sarcasm on my part.

 

i had hoped no one would think I seriously believe Venezuela is being pulled out of it’s problems as if oil hits $200 a barrel the world will probably crumble.

Got it, Yup very dry sarcasm, such a hard thing to write on a forum. I know it well.  

[loki]

On 7/13/2018 at 6:07 PM, Drew Dowdell said:

being a controlled economy, they can slowly increase the price of gasoline. take the profits and use them to subsidize electric charging station installations. 

do you mean through direct taxes, indirect taxes or that their refineries are state owned?

not that i agree with subsidizing these things, but i generally think that as wealth increases and production and tech ramps up with better and more batteries, EV's have to get more prevalent.

[Drew Dowdell]

1 minute ago, loki said:

do you mean through direct taxes, indirect taxes or that their refineries are state owned?

not that i agree with subsidizing these things, but i generally think that as wealth increases and production and tech ramps up with better and more batteries, EV's have to get more prevalent.

They have multiple avenues.  Since they are trying to be more economically democratic, but still with a directed economy, the way to most influence consumer spending is to charge additional tax at the pump and use that tax to build temporarily subsidized EV charging stations.   That way "The People" can vote with their wallet the next time they buy a new car.