China’s local governments are offering cash subsidies to encourage consumers to buy electric vehicles (EVs) in a bid to spur consumption and revitalise a sector hit hard by the Covid-19 pandemic curbs. The mainland’s capital Beijing and Wuhan, the capital of central China’s Hubei province, will provide financial aid to owners of petrol-powered vehicles to replace them with new-energy vehicles – pure electric, plug-in hybrid and hydrogen fuel-cell cars. The moves by the two cities come after Shanghai and Guangdong province launched similar schemes in the past few weeks to stimulate sales of green vehicles, a bright spot in the mainland’s slowing economy . “Local governments are aware of the role the EV industry can play in driving economic growth and keeping jobs,” said David Zhang, a researcher at the North China University of Technology. “The incentives, aimed at helping NEV carmakers to make up for the lost ground caused by lockdowns [in Shanghai and Jilin], will generate additional sales of several hundred thousand new cars.” On Monday, 10 government departments in Wuhan said in a joint statement that internal combustion engine (ICE) car owners will be given a grant of 8,000 yuan if they replace it with an NEV. The subsidies are on top of a 3,000 yuan subsidy – offered by the Wuhan government earlier this month to encourage the purchase of battery-powered vehicles. A day earlier, the Beijing municipal government offered a subsidy of 10,000 yuan (US$1,495) to buyers replacing ICE cars with NEVs. Sales of NEVs in China were expected to jump 84 per cent year on year to 5.5 million units in 2022, according to a forecast by the China Passenger Car Association. But lockdowns in Shanghai, which accounts for one in nine vehicles assembled in China, and Jilin, dealt a heavy blow to EV makers, as lockdowns to contain the spread of Covid-19 strained the supply chain and caused major players to suspend production. Tesla’s Gigafactory in Shanghai lost 50,000 units in production between March 28 and April 18 as it idled the plant to comply with the city’s virus prevention policies. Earlier this month, Shanghai municipality announced that it would offer buyers a subsidy of 10,000 yuan to replace their used ICE cars with NEVs. It is expected that the mainland’s automotive industry will restore production to full capacity in July after Jilin and Shanghai emerged out of the coronavirus outbreak. “Local governments’ incentives are set to give the carmakers a shot in the arm, with some of them expected to add shifts to their factories in the coming months to increase output,” said Tian Maowei, a sales manager at Yiyou Auto Service in Shanghai. Last week, the State Council, China’s cabinet, said it was mulling extending the tax exemption on EV purchases, which will end this year, to spur consumers to spend a further 200 billion yuan on green vehicles. At present, the national government grants a subsidy of 12,600 yuan to buyers of electric cars with a driving range of more than 400km.