China cuts electric car subsidies by up to 60 per cent as it looks to improve technological standards to global levels

The Chinese government’s move to slash subsidies by up to 60 per cent on electric cars is likely to dent sales in the short-term in the world’s largest green car market, say analysts.

Late on Tuesday evening, four ministry-level authorities including the Ministry of Finance introduced tougher subsidy policies to improve the technological standards of the NEV industry.

Subsidies on NEVs with a driving range of 250-300 kilometres have been reduced to 18,000 yuan (US$2,686) from 34,000 yuan. For cars with a range of between 300-400km, the subsidy has been cut by a much sharper 60 per cent to 18,000 yuan, from 45,000 yuan earlier and cars with a driving range of more than 400km, the subsidy has been cut by 50 per cent to 25,000 yuan.

Battery-powered cars with a range of less than 250km will not receive any subsidy.

The new measures call for a steady increase in the energy density threshold for the NEV power battery system and energy consumption requirement while raising the mileage threshold for the continuous driving of electric cars.