China has the world’s largest and among the fastest-growing plug-in electric vehicle markets, thanks in large part to subsidies and tax advantages. It is discussing with manufacturers to extend pricey electric vehicle (EV) subsidies which were slated to expire in 2022. EVs are BEVs (battery electric vehicles, PHEVs (plug-in hybrid electric vehicles) and extended-range electric vehicles), and fuel cell electric vehicles in the Chinese context (FCVs). The purpose is to help the industry and grow this important sector.
China’s economy has slowed drastically in recent months, and so have vehicle sales. Since the beginning of 2022, many cities and industrial parks throughout China, notably the industrial giant – the Yangtze River Economic Basin – have alternatively ceased production due to COVID-19 preventive and control laws. The pandemic-related limitations have resulted in store closures, interruption of supply chains, and decreased consumption expenditure.
To increase consumer interest in China’s EV sector, different government departments, including the MIIT (Ministry of Information and Industrial Technology), are currently considering extending incentives to EV buyers until 2023.
China has long aspired to be the world leader in the EV sector. To promote the adoption of EVs, the Chinese government began providing large subsidies for EV purchasing in 2009, despite the fact that EVs were more expensive than traditional ICE (internal combustion engine) vehicles. Since then, the central government has spent nearly RMB 200 billion on Electrc Vehicle subsidies, with local governments contributing another RMB 100 billion, totaling RMB 47 billion.
China said in 2014 that it would prolong these incentives beyond their initial 2015 termination date as part of ongoing efforts to boost plug-in vehicle sales and decrease air pollution. That investment was profitable. In 2016, for example, total sales of EVs and PHEVs in China grew 62 % to 336,000 units, making it the world’s largest market for hybrid vehicles, accounting for 44 percent of global sales. This was an astonishing result, given that China’s market share was only 6% in 2013.
EV production and usage are precisely aligned with China’s economic, industrial, and carbon-reduction aims, making the industry vital to the government. So far, Beijing has remained committed to attaining its objective of 20% EV deployment by 2025. China is the world’s biggest manufacturer of lithium-ion batteries, which are used in the majority of electric vehicles. While other countries hold the majority of the world’s lithium resources, and China imports 80 % of its needs, China has already purchased the majority of mines lithium for future output. It implies that China’s future is going to be electric.